KARACHI, Dec 28: Exporters are demanding of the government to streamline payment of Research and Development (R&D) support by introducing Section 154 of Income Tax Act, wherein government recovers taxes on export realisation and banks also duly receive remittances without any difficulty.

Ever since the government allowed R&D to readymade garments and home textiles, there is a general complaint on behalf of exporters that the system of disbursement of support fund was extremely cumbersome as its involves lengthy procedures of submitting documentation with relevant trade body, commercial banks, the customs and the State Bank.

As a result of this, most of the payments towards R&D are held up and the government’s objective of supporting the industry remains unfulfilled, exporters are of the view.

They said if the government adopts procedures as laid down in Section 154 of Income Tax Act for disbursement of R&D, it would enable both the sides to achieve the desired objective and save the industry which presently needs support to maintain its viability, as well as market share in the world.

In Section 154, exporters say different percentages are applied for different products meant for exports and it has become standard procedure for the government to receive and collect taxes from export industry or trade. Therefore, if this system is successful and is still operative, it could also be adopted for disbursement of R&D support, they added.

The best part of this system is that there is no much documentation and it would only require that the commercial banks will have to pay R&D with remittances to exporters. The banks can subsequently claim this amount from the State Bank. The commercial banks hold all details and information about exporters and can surely protect the interests of the government and ensure expedient payments of R&D to exporters.

The trade bodies, which have been entrusted with the task of verification and processing R&D claims of their members, complain that presently even a claim of Rs500 requires around a dozen set of documents and involves a very large number of institutions, including State Bank, commercial banks, shipping company documents and verification of HS code.

They further informed the government that even a medium-sized exporter submits around 100 to 250 invoices every month and these are initially submitted with trade bodies, and thereafter, these invoices move to half a dozen institutions for further verifications and approval.

Pakistan Bedwear Exporters Association (PBEA) chairman Shabir Ahmed has also written a letter to the minister for textiles, Mushtaq Ali Cheema, stating that the present cumbersome formula has to be changed to suit the ground realities.

“It is being felt that in its present form the support remains restricted to the accrual in the books of accounts which already has reached millions of rupees with the exporters and not helping them with the liquidity to invest in the purpose it is given for,” he asserted.