ISLAMABAD, May 5: The Central Board of Revenue (CBR) has notified zero rating of polyester staple fibre (PSF) and its raw materials to boost up production of textile products. The decision was announced through a sales tax notification SRO363 by amending the SRO500 of 2004 here on Thursday.

According to the notification, the zero rating would be allowed on mono ethylene glycol, pure teriphthalic acid, acrylonitrile, polyester chips (yarn-grade), synthetic staple fibres of polyester, polypropylene staple fibres, viscose rayon staple fibres, artificial staple fibres, nylon staple fibres, polyester staple fibres, acrylic staple fibres and synthetic staple fibres, respectively.

A sales tax official said that the exporters would now be entitled to buy tax free textile raw materials, both local and imported, thus freeing a substantial amount of funds for them to invest and increase exports.

The facilitation measure was multi-dimensional as it would also reduce the financial cost of the procurement of these raw materials hence directly reducing the cost of production of export items making them more competitive and financially lucrative in the highly competitive international market, he added.

In the budget of 2004-05, supply of ginned cotton was zero rated. Subsequently, import of ginned cotton was also zero rated. However, the base of textile chain remained uncompetitive as staple fibre that over a period of time has become one of the major raw materials in the manufacturing of yarn remained outside the scope of zero-rating.

Now both the two main building blocks of the textile chain — ginned cotton and staple fibre — were under the zero rate regime, thus providing a complete and smooth platform for production of textile products, added the official.