ISLAMABAD, May 10: The government is considering zero rating of sales tax on the local supply and import of textile products, carpets, surgical, sports and leather products. Officials told Dawn on Tuesday that the proposal was part of the recommendations of textile industry and ministry of commerce to boost export of the commodities.

The decision was expected to be announced in the budget 2005-06 after consultation with all the relevant stakeholders, the officials added. The proposed measures would not only mitigate the hardships of export houses with particular reference to their cash flow problems as well as hassles in obtaining refund payments from the department but would also eliminate refund related mal-practices.

The government had already allowed zero rated supply and import of ginned cotton, import of man-made staple fibre and its raw materials. It was also under consideration to allow zero rated import and local supply of yarn.

The ministries proposed to the government that the zero rating of all textile raw materials and inputs would help the exporters 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.

According to the officials, the chairman Central Board of Revenue (CBR) M. Abdullah Yousuf has asked all collectors of customs, sales tax to give their input on the proposed zero rating of the whole chain of textile products both locally and imported.