The value-added textile sector has requested the finance minister for an urgent meeting, saying their demands were not considered in the federal budget for fiscal year 2021-22.
Welcoming the budget, the exporters have said that the federal budget for FY22 is better as compared to previous budgets, however, their most anticipated demands for the restoration of GST zero rating (no payment, no refund system), reduction in withholding tax (WHT) rate to 0.5% and suspension of EDF surcharge were not given due consideration, which has caused dissatisfaction and annoyance.
The imposition of 17% GST has made textile exporters, especially SMEs, financially unviable as their liquidity, without any purpose, is stuck and they throughout the year face financial difficulties in fulfilling their export commitments, paying utility expenses and salaries to staff and labourers and are also reluctant to take new export orders. The demands were made at a press conference held by various value-added textile associations before the announcement of budget on June 11.
According to records, 33% o SME exporters have closed their export business as compared to last year due to the imposition of 17% GST, which blocked exporters’ liquidity, said Pakistan Apparel Forum Chairman Jawed Bilwani.
“With the continuation of 17% GST in 2021-22, many more SME textile exporters, who managed to survive last year, are feared to close down in the wake of liquidity pressure,” he added.
The government has reduced customs duty, additional customs duty and regulatory duty on the import of goods falling under 589 PCT codes to incentivise the textile industry, said Pakistan Cloth Merchants Association Chairman Abdus Samad.
However, customs duty, additional customs duty and regulatory duty on disperse dyes PCT 3204.1100, VAT dyes PCT 3204.1590, reactive dyes 3204.1600 and liquid (pigments) 3204.1720 have not been reduced or exempted.
Moreover, under measures taken for income tax, the government eliminated the requirement of filing an application for the automated issuance of refund, introduced time limitation for the disposal of show cause notices, automated the issuance of exemption certificates if the application is not disposed by the commissioner within 15 days and removed the requirement of updating tax profile. All Pakistan Textile Processing Mills Association Chairman Zulfiqar Chaudry said the value-added textile sector has also submitted a proposal for the reduction and fixation of tariffs of electricity.
Published in The Express Tribune, June 15h, 2021.
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