Textile manufacturers-cum-exporters proposed expansion of sales tax zero-rating regime by adding new items in SRO 1125(I)/2011 along with exemption of income tax on the import of raw material, plant and machinery in the coming budget (2012-2013).
According to the proposals, submitted by the Pakistan Hosiery Manufacturers & Exporters Association and Pakistan Apparel Forum to the Finance Ministry, the manufacturer-cum-exporters pay three percent to five percent income tax on the import of raw material and machinery, which is later refunded at the end of the year or exemption is given for payment of income tax on the production of an exemption certificate issued on case to case basis.
In both cases, due to cumbersome procedure unnecessary time of the exporters as well as Income Tax department is wasted.
Therefore, it is proposed to save the hassle and unnecessary time; the manufacturer-cum-exporter whose annual export is of one million dollar and above be issued an exemption certificate for income tax on the import of raw material and plant and machinery on annual basis.
The manufacturer-cum-exporter further mentioned that some products like sinkers, needles, sewing machine needles and shuttles used in garment/ fabric knitting, were earlier imported at zero percent sales tax under the SRO 549(I).
However, after withdrawal of the said SRO these products are subject to 16 percent sales tax.
The imposition of sales tax has rendered these products uncompetitive as compared to smuggled ones which are on the rise.
Consequently opportunists are depriving the exchequer by using un-official channel to bring these products in the country without payment of duty and taxes.
The official import of these products has therefore reduced by 75 percent resulting in heavy loss of revenue to exchequer.
These products have no use in other sector and are mainly used by the export-oriented textile sector.
Since these products are exclusively used by zero-rated sectors as consumables, it is proposed to add these products in the SRO 1125(I)/2011.
The inclusion of these products in SRO 1125(I)/2011 will not only enhance the government revenue but also discourage the opportunists.
Currently the entire industrial sector more specially the export-oriented industrial sector is plagued with the severest ever utilities problem with frequent and unannounced load shedding of electricity.
The exporters have deadlines and commitments to keep with their foreign buyers and all this is jeopardised just because of frequent load shedding that resulted in cancellation of vital export orders.
Therefore, it is proposed that to save export sector, the government should make a policy and announce complete closure of all shopping centers, malls, retail shops, markets on Friday and alternatively keep these open on Sunday.
The industrial sector more specially the export-oriented industrial sector should be exempted from load shedding.