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Sales tax of 3% on fabrics irks Pakistan textile sector
14
Oct '13
Pakistan’s Federal Board of Revenue’s (FBR) recent move of subjecting all import and supplies of all fabrics, irrespective of it being finished or raw fabric, to uniform sales tax (ST) of three percent has met severe criticism from the value-added textile industry of the country.
 
In a joint statement, the leaders of value-added textile industry said the entire textile chain right from yarn purchase to dyeing and other stages by exporters is already enduring two percent sales tax, and such uniform levy on fabrics would further hit the already ailing sector.
 
The textile industry is already suffering due to large amount of pending dues of sales tax and custom duty refund and rebate, as well as the Federal Excise Duty (FED) and Duty Drawback of Local Taxes and Levies (DLTL) claims, which have caused severe liquidity crisis, preventing the exporters from honouring their export obligations. 
 
The Increased sales tax would further intensify the liquidity crisis, the statement said.
 
The industry leaders said that though fabric meant for domestic use may be taxed at three percent, finished fabric for producing garment for export purpose should be subjected to a tax of only two percent.
 
Also, they emphasized on sustaining the zero-rated status for value-added textile exports and subjecting the sales of finished fabric to producer-cum-exporters to a levy of two percent, as it makes no sense in collecting tax to refund back the same.
 
The statement was jointly issued by Pakistan Denim Manufacturers & Exporters Association Chairman Dr. Mirza Ikhtiar Baig, Pakistan Hosiery Manufacturers and Exporters Association Chairman Irfan Z Bawany, Pakistan Cotton Fashion Apparel Manufacturers and Exporters Association Chairman Khwaja Mohammad Usman, Pakistan Apparel Forum Chairman M Jawed Bilwani, Pakistan Knitwear and Sweater Exporters Association Chairman Kamran Chandna and Readymade Garments Manufacturers and Exporters Association Chairman Arshad Aziz.
 

Fibre2fashion News Desk - India

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