Delay in tax refund worries exporters

Updated 05 Jul 2020

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Textile exporters are worried and upset as to how the government will keep its commitment for timely refunds during FY20-21. — AFP/File
Textile exporters are worried and upset as to how the government will keep its commitment for timely refunds during FY20-21. — AFP/File

KARACHI: Textile exporters are perturbed over excessive delays in general sales tax refunds (GST) causing liquidity problems from July 2019 when the 17 per cent GST was imposed by the government in the previous budget despite stiff resistance from five zero-rated export sectors.

In view of the ill experience during FY19-20, textile exporters are worried and upset as to how the government will keep its commitment for timely refunds during FY20-21, said a press release on Saturday.

Pakistan Hosiery Manufacturers & Exporters Association (PHMA) Central Chairman Chaudhry Salamat Ali said that exporters are facing extreme uncertainty as the government has completely ignored their major demands and recommendations, proposed by the textile associations and leading chambers of the country.

As per the past practice, the PHMA had given its suggestions for the Federal Budget 2020-21, however, to our utmost surprise, the government had ignored our proposals and refused to even consider them, he added.

It is highly unethical and inappropriate that first time in the history of country, stakeholders were totally ignored before and after the budget. The textile sector is the backbone of the economy. Moreover, it is the most labour-intensive sector providing employment to workers.

He said the government launched FASTER system without testing its accuracy to transfer sales tax refunds within 72 hours.

The system could not function during first 5-6 months and remained inactive.

Meanwhile, the Federal Board of Revenue (FBR) processed claims manually whereas the State Bank of Pakistan released the funds on FBR’s advice.

In the wake of global slowdown due to Covid-19 and imposition of 17pc GST in last budget, the value added textile export sector is likely to face disaster due to the liquidity crisis as billions of rupees are stuck up with the government.

In view of above, the value added textile sector strongly demands restoration of zero rating regime on GST — no payment no refund system — or a reduction in GST from 17pc to 4pc.

Published in Dawn, July 5th, 2020