Appeal for zero-rating on domestic sale of cotton & fabrics

08 Dec '10

2 min read

Though the textile industry has accepted the Reformed General Sales Tax (RGST) on the domestic sale of knitwear, bed-wear, apparels, towels and such other made-ups but it has urged the government to permit zero-rating on the domestic sale of cotton, yarn, other fabrics, dyed fabrics and processed fabrics.

According to the information provided by the All Pakistan Textile Mills Association, the textile industry has a share of 8.5% in the economy of Pakistan; it provides employment to 38% of the labor force involved in the production sector, direct employment to around 3.5 million people and indirect employment to 10 million people in the nation.

The tax realization from the textile value chain is likely to stand at Rs 25 billion and the net non-refunded deposits is expected to be Rs 391 billion as per the estimation of APTMA. The RGST payment from the industry is anticipated to stand at Rs 518 billion. Of this, the spinning sector is likely to contribute Rs 213.408 billion, the weaving sector Rs 116.976 billion, the processing sector Rs 111.633 billion while Rs 37.339 billion and Rs 39.558 billion are likely to come from the bed-wear, towels, made-ups and the apparels as well as knitwear sector, respectively.

APTMA appealed the government to permit zero-rating on the domestic sale of textile products as well as other articles in RGST as has been done in case of the current Sales Tax, 1990. Zero-rating should be permitted on all inputs and services used in the textile sector to avoid refunds and formal requests for payments since 80% of the textile commodities are exported in one or the other form.

Fibre2fashion News Desk - India

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