KARACHI, May 18: The Pakistan Hosiery Manufacturers Association (PHMA) has taken strong exception of the Central Board of Revenue’s (CBR) study stating that textile sector share in taxes is negligible. In a statement issued on Friday, PHMA central chairman Naqi Bari said that all care should be taken when such statistics were released to media because they did not segregate the concerned sector of textile from those who were paying higher taxes at each step of their processing and value-addition.
He said that the value added knitwear sector was the highest taxpayer and apart from the withholding tax of one per cent of exports this sector paid multiple taxes on the whole chain of backward linkage beginning from ginning, spinning, knitting or weaving, processing, outsourcing stitching.
Other than these stages the value-added knitwear sector had to pay taxes on forward supply chain which included accessories, embroidery, washing, decorative arrangements and a whole chain of multiple packaging industries. The knitwear industry had to bear all taxes which were paid in the processing of finishing the garments and other textile goods.
Mr Bari claimed that the knitwear sector so far had paid Rs1,038 million towards withholding tax (income tax) which was deducted on export proceeds additionally and said 5 per cent tax on inputs had been paid, which comes to Rs3,000 million.
Consequently, the PHMA chief said that it was evident that value-added knitwear sector was heavily burdened with 6 per cent tax on its input apart from 1 per cent withholding tax.
He demanded that whereas withholding tax should stay but tax on inputs should be paid back on export performance basis to make knitwear exports zero-rated in true sense.
If the government ensures exports of value-added textile goods at zero rate it will immensely help exports to grow and maintain our due share in the world market, he added.
