Pakistan yarn merchants are worried over the complex and anti-business taxation policy and hence, have warned that if the new turnover tax rate is not removed with immediate effect, then yarn traders would shut their businesses in protest, leading to job loss of thousands of wage earners.
As per Muhammad Ashraf Gandhi, former Chairman of Pakistan Yarn Merchants Association (PYMA) and central leader of Action Committee, the turnover tax rate would be applicable to all yarn trading firms, APOs and individuals who have a turnover over Rs 50 million.
Gandhi also informed that, this new turnover tax rate is being hiked from 0.5 percent to 1 percent, under the new regulation in the Finance Bill. This is said to be quite economical considering the profit margin for yarn traders, which is low.
Therefore, anyone with more than Rs 50 million as turnover can automatically become the withholding agent and it is mandatory to deduct 3.5 percent as withholding tax. Hence, this step becomes illogical as many yarn traders have over Rs 50 million in turnover.
Gandhi further added that, the increased turnover, was a result of the rise in yarn prices and also because the textile business is one with high-volume and low profits. More so, if a yarn trader pays 3.5 percent as withholding tax, then it is likely that he is earning around 10 percent as profit, which is not possible in case of textile business. At an average, the regular profit margin of a yarn trader is just around 1-2 percent.
However, Gandhi fears that, in the above process, a yarn trader, who provides the end user with certain finances, will be removed by this harsh tax. Hence, Gandhi has urged the government to withdraw the turnover tax as soon as possible for the best interest of the textile segment, especially the small scale manufacturers, who are operating as vendors for big and medium textile producers and processors.
Fibre2Fashion News Desk - India
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