ISLAMABAD, May 21: The government is expected to reduce tariff and sales tax rates on as many as 45 textile-related items in the federal budget, Dawn has learnt.
Informed sources told Dawn that reduction in import duties on these items was part of tariff rationalization process going on for a couple of years aimed at reducing input cost of the textile industry to prepare them for upcoming quota-free era.
Most of the tariff rationalisation measures have been proposed on the recommendations of various textile associations in consultation with ministry of industries and production, experts advisory cell and the Central Board of Revenue.
The sources said the textile industry had demanded drastic reductions in duties and in some cases complete elimination but the government did not oblige as such owing to revenue targets.
The sales tax on polyester and man made fibre (MMF) would be fixed at 15 per cent. The industry believed that to charge 20 per cent GST on MMF input against 15 per cent on output of PSF and VSF is discriminatory.
The sales tax on MMF was increased from 15 per cent to 20 per cent in 2001 whereas the output tax remained at 15 per cent. Mills using polyester staple fibre (PSF) and viscose staple fibre have to pay 20 per cent sales tax at the time of purchase of raw material, which is adjusted against the output tax of the relevant tax per cent.
The items on which statutory duty would be reduced from 10 per cent to five per cent include spin finish oil, hydrogen peroxide, amine-function compounds, dithinoites of sodium, oxygen function amino compounds, supported catalysts with nickel or nickel compounds as the active substance, polyvinyle alcohol, silicones in primary forms, printing blankets, single yarn containing 85 per cent or more by weight of artificial staple fibre, cards incorporating a magnetic stripe, other instruments and apparatus.
The items on which statutory duty would be reduced from 20 per cent to 15 per cent include pigments and preparations based thereon, synthetic organic colouring matter.
The items on which duty is being reduced from 25 per cent to 20 per cent include pigments and preparations based on chromium compounds, unsaturated polyesters, spools, cops, bobbins and similar products, pully, conveyor belts, endless transmission belts or trapezoidal cross section-V, ermery brushes, synthetic filament yarn, artificial filament yarn, dosing pump, other appliances, hollow shaft, packing ring, lithopone and other pigments based on zinc sulphide uninterrupted power supply (UPS) of upto 1.5 kva.
Similarly, the items on which statutory duty would be reduced from 20-25 per cent to 10pc include polypropylene vulcanised rubber threat and cord, transfers, aluminium wire, display console and impulse transmitter.