KARACHI, July 8: Manufacturers-cum-exporters who have been allowed zero rating on inputs are in a quandary as to how they will get refunds on those items which are yet to be zero-rated under the new scheme announced by the government in budget 2005-06, and has become effective from July 1, 2005.

In a statement issued on Friday, Towel Manufacturers’ Association of Pakistan (TMA) chairman Syed Usman Ali said that on June 17, 2005, CBR issued SRO 621(I)/2005, specifying items for zero rating of sales tax on some textile and other items. It also issued SRO 538(I)/2005 stating that no refunds of sales tax will be made on stocks after June 30, 2005.

He pointed out that since not all items used as inputs in textile export had been zero rated, the question arises as to how exporters will claim sales tax refund on items not yet zero-rated.

The TMA chief further said that when this issue brought into the notice of the CBR chairman, he promised that an SRO would be issued that would give procedure for the refund of sales tax to exporters on such items, but so far no such SRO had been issued.

Instead of issuing the SRO, the CBR issued SRO 666(I)/2005 which has created further confusion among manufacturers-cum-exporters as para(e) states that “Manufacturer means such registered person: i)who is engaged in the manufacture and supply of goods other than those specified in SRO 621(I)/2005 dated June 17, 2005 and ii) whose refund claims are not being dealt with under Chapter V of the Sales Tax Rules, 2005.”

Syed Usman Ali said that almost all manufacturers-cum-exporters of textiles, leather, carpets, surgical and sports goods are classified under SRO 621(I)/2005 as well as Chapter V of Sales Tax Rules. It means that the items which are now subjected to Sales Tax couldn’t be refunded to exporters.