LAHORE: The Pakistan Textile Mills Association (Aptma) has deplored SRO 140(i) 2013 issued under section 148 of Income Tax, whereby the withholding tax on import of all textile raw materials and machinery has been increased from one to five percent.
While addressing a press conference on Friday,APTMA chairman Ahsan Iqbal said that the measure would burden textile exporters with Rs10 billion in refund claims. “The income tax on all exports is one percent, which textile exporters pay at the time of export of consignments at the custom terminal,” he said.
He said that the textile industry imports cotton worth $1 billion every year and manmade fibre worth $1 billion, both of which are basic raw materials for the industry that exports 80 percent of the textiles that it produces.
He added that this $2 billion, when converted to rupee comes down to Rs200 billion. After the increase in withholding tax, they will have to pay Rs10 billion tax to authorities at the import level.
He questioned the wisdom of collecting the tax from the industry when the Federal Board of Revenue (FBR) will eventually be refunding the amount. “The hassle faced by the industry in refunds is well known to all. Several refund cases dating back to several years are pending with the FBR. This measure will burden each average sized mill with Rs190 million stuck up refund annually,” he said.
Iqbal deplored that the FBR has not learnt from the past and has again levied a two percent sales tax on all textile products, whether meant for local consumption or exports. He said this will again raise the issue of refunds. “Earlier, the SRO that imposed sales tax on domestic consumption at the rate of five percent was also flawed and created frauds, which could have been removed,” he said
He informed that the finance minister has called the APTMA delegation on Saturday at 5 pm, where he hoped all issues will be resolved.