KARACHI: Pakistan Bedwear Exporters Association (PBEA) on Monday rejected the Federal Board of Revenue’s (FBR) draft refund rules.

In a letter addressed to the board, the PBEA asked FBR chairman to meet with all stakeholders before finalising the rules.

The PBEA Chairman Shabir Ahmed said the sectors would face a number of issues if these rules are implemented. He added that 17 per cent general sales tax would affect manufacturers’ cash flow that make local sales or export goods.

He said that after reviewing draft rules, it seems the new mechanism will create severe liquidity crunch for the three export sectors as they would not be able to adjust their input/output tax.

On the other hand, he said those manufacturers who sell local and also export their goods with fully integrated units can easily adjust their refunds and their sales tax would not be blocked.

The PBEA chairman lamented that already a huge refund amount was still pending since 2005 and successive governments kept lingering the issue in order to improve liquidity at the cost of country’s exports.

ST on finished goods

Meanwhile, the FBR has been asked to withdraw 17pc sales tax notification related to the inclusion of finished articles in the Third Schedule of Sales Tax Act 1990 through Finance Act 2019.

Rawalpindi Chamber of Commerce and Industry (RCCI) President Malik Shahid Saleem talking to a delegation of importers on Monday said that this amendment had created a difficult situation where one could not calculate retail prices of the products at import stage.

The importers were of the opinion that it was impossible for them to determine retail price of a finished article including all overheads; duties, commission, transport charges etc, at the import stage and if they did, it would be completely based on assumption.

The RCCI president said that the given amendment has triggered panic among the commercial importers who are reluctant to get their consignments cleared.

Previously, the importers got their consignments cleared as per customs value; however, now they had been directed to print retail prices on each individual item and the customs department would now clear consignments on the basis of declared retail prices, putting excessive burden of additional packaging cost on importers, he informed.

Published in Dawn, July 30th, 2019