‘Textile industry defrauded exchequer of Rs500b’

Former finance minister says tax refund claims exceed tax payments.


Zafar Bhutta March 18, 2013
Photo of a textile mill factory in Pakistan PHOTO: AFP

ISLAMABAD:


Following up on his statements made a day earlier, Former finance minister Saleem H Mandviwalla has claimed that the textile industry has been involved in tax refund fraud worth Rs500 billion.


“Many fraud cases have been booked against the textile industry over illegal tax refunds of Rs500 billion,” the former finance minister told The Express Tribune. He claimed that the textile industry had been involved in defrauding the exchequer for decades, as the sector was zero-rated and therefore difficult to monitor.

“After imposition of 2% tax, the Federal Board of Revenue (FBR) has detected a tax refund fraud of Rs500 billion though its computerised records, as the textile industry deposited Rs190 billion in sales tax and filed for refunds of Rs690 billion,” he said.



He claimed that many cases had been registered against the textile industry, and that the All Pakistan Textile Mills Association had come up to negotiate for settlement. As many as 12 cases were registered against textile groups over refund cases, he said.

When contacted, a spokesperson of the textile industry said that the statement of the former finance minister has been misquoted, as Rs500 billion was the amount of textile products sold in Pakistan during the last twenty months. “Textile industry has not taken refunds amounting to Rs500 billion, as claimed by the finance minister,” the spokesperson said.



He said that the textile industry was producing goods worth $15 billion per annum. The textile industry exports products worth $13 billion, whereas $2 billion worth of goods are used in the country.

He said that a 5% tax was imposed on the industry for processing charges for registered companies, which amounted to Rs15 billion in taxes in a year. He said that the flat 2% tax now imposed on registered and unregistered companies would mean lower total tax liabilities of Rs6 billion.

Published in The Express Tribune, March 19th, 2013.

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