Ginners strike enters 19th day

23 Aug '11

2 min read

For 19th day in succession on Tuesday, around 1200 ginning factories stuck to their decision of not buying raw cotton (Phutti) from the cultivators till the SRO of collecting 3.5 percent withholding tax is rolled back.

Meanwhile, the Pakistan Cotton Ginners Association (PCGA) has said that both President Asif Ali Zardari and Prime Minister Yousuf Raza Gilani have given assurance of early redressal of the grievances of the ginners.

The SRO released by the Federal Bureau of Revenue (FBR) empowers the ginners to collect 3.5 percent withholding tax from agents when they purchase raw cotton from them. The SRO also authorizes the ginners to examine the ownership papers of the cultivators, certificate and other documents related to land holding which have been issued by Patwaris and deposit a tax of minimum of PKR 87 billion in national treasury.

PCGA has stated that the ginners are not willing to act as tax collection agents and maintain records of others. It said that the ginners neither have enough employees to examine these documents nor have the expertise needed to distinguish the original documents from the forged ones.

Explaining the reasons for the strike, Mr Masood Majeed, Chairman, PCGA told fibre2fashion, “Previously withholding tax was exempt for the agricultural produce, but now the exemption is only for the agricultural producer; not the produce. This withholding tax is just like an advance income tax. It will be refunded if their income is below a certain amount”.

He continued, “But the problem is that the procedure is so cumbersome that the ginners have to deduct the tax and deposit in the national exchequer and keep the records. This tax is not on the ginner, but still he has to keep records for five years and also records of farmers to prove that they are the original farmers, after which only tax will not be imposed”.

He added, “In the future, if there is a problem with the certificate from the farmer and if the Government cannot locate that farmer, the tax will have to be paid by the ginner with the fine, which according to us is not the correct policy”.

“Definitely, we understand that it is affecting the Pakistan cotton ginners as well as farmers, however the ginners are not willing to be just withholding agents, as they will be penalized without any benefits”, he concluded.

Fibre2fashion News Desk - India

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