ISLAMABAD, April 19: The government is considering a proposal to allow zero- rated supply and import of cotton yarn. Well-placed sources told Dawn on Tuesday that the textile industry had proposed zero-rated supply and import of cotton yarn to facilitate the textile exporters. The exemption was likely to be announced in the upcoming budget for 2005-06.

The Central Board of Revenue (CBR) had raised around Rs2.629 billion under the head of sales tax from cotton yarn during the year 2003-04.

This means that following the total exemption of sales tax on cotton yarn would result in a revenue loss of around Rs3 billion from the next year.

The government had already allowed zero-rated import of ginned cotton and was also considering zero rating of man-made staple fibre.