Textile for restoring zero-rating facility as sales tax refund claims unpaid


In this photograph taken on November 16, 2016, workers operate a machine at a textile factory in Faisalabad. — AFP
In this photograph taken on November 16, 2016, workers operate a machine at a textile factory in Faisalabad. — AFP

FAISALABAD: Businessmen attached with the textile sector have urged the government for restoration of the zero-rated facility for the sector if it cannot release billion of rupees sales tax refunds as the industry is dying due to financial crunch.

Pakistan Hosiery Manufactures & Exporters Association (PHMA) central chairman Haji Salamat Ali criticised the Federal Board of Revenue for not issuing billions of rupees refunds to exporters despite promises.

He said FBR chairman Shabbar Zaidi had been reminded through a letter about the commitment the board had made with the exporters that refunds would be paid to them within 72 hours of filing of [refund] claims. For the purpose, FASTER refund module has been developed, which shall process claims of exporters for the tax period July 2019 and onwards.

The FBR has earlier clarified that submission of Annexure-H, which is a form in the monthly sales tax return, shall be treated as submission of refund claim. The exporters are facing difficulties in filing of their tax refund claims (Annexure-H) under FASTER.

He said the financial problems of exporters were multiplying due to inordinate delay in payment of sales tax refunds as their liquidity continues to squeeze while FBR has not honoured its commitments.

The pending tax refund claims of exporters for July-August 2019 should immediately be released, he added.

In case of failure to release speedy refunds, the government should restore zero rating- No Payment, No Refund - regime for export-oriented sectors, he suggested.

Faisalabad Chamber of Commerce and Industry Senior Vice President Zafar Iqbal Sarwar, talking about ST refunds, said Rs80 billion are regular claims pertaining to July 2019 to October 2019. Another amount of Rs10bn and yet another Rs30bn claims are pending respectively under section 66 (Pending since 2014) and deferred since 2012.

About other pending refunds, he said among these included Rs15bn from the head of duty drawback, Rs19bn from income tax, Rs15bn from income tax credit and Rs5bn from the head of provincial sales tax.

Chairman of All Pakistan Textile Processing Mills Association (APTPMA) Muhammad Pervez Lala came up with suggestion of reduction in the sales tax rate and said the rate should be reduced from 17 per cent to 5pc which was imperative to save textile sector from total collapse.

“The textile industry has the status of Pakistan’s top national industry which is providing products to millions of domestic consumers. The sector is also providing jobs to millions of labourers directly or indirectly and generating revenue of billions of rupees. But unfortunately due to abolition of sales tax zero rating regime and imposition of GST, the industry is facing a serious crisis. Hence, it is necessary to reduce the rate of sales tax urgently at adequate level.”

Published in Dawn, November 4th, 2019