Karachi: Millat Tractors Limited (MTL) has announced a temporary cessation of production, citing significant delays in the government's refund mechanism for Goods and Services Tax (GST) paid on raw materials, which stands at 18%, compared to the 10% GST on tractors.

This decision, crucially conveyed to stakeholders through a compliance notice in line with Sections 96 and 131 of the Securities Act, 2015 and Clause 5.6.1 of the Rule Book of the Pakistan Stock Exchange Limited, reflects ongoing fiscal pressures. According to information available from the Pakistan Stock Exchange (PSX), the discrepancy in GST rates has led to a growing backlog of refund claims by MTL, which has not been addressed by the government despite repeated inquiries for a resolution.

The company has communicated its stance to the TRE Certificate Holders of the Exchange, emphasizing that production will remain halted until a satisfactory mechanism for processing GST refunds is established by the government. This step is seen as a measure to mitigate financial strain and safeguard the company’s operational viability in the face of unresolved tax refund issues.

The impact of this production stoppage on MTL’s financial health and on the broader agricultural sector, which relies heavily on the availability of tractors, could be significant if the issue persists. Stakeholders are awaiting a prompt response from the government to resolve the refund issue and help resume normal production activities at MTL.