Textile exporters seek release of Rs50bn stuck up tax refund

KARACHI: Pakistan’s textile industry has been looking forward to a full refund of export tax rebates as early as possible as the delay in releasing the outstanding tax and duty drawback could further erode sector’s ability to export and also squeeze their profitability, industry officials said on Tuesday.
Officials said the government is yet to clear refunds worth Rs50 billion for textile exporters under the duty drawback scheme, accumulating till October 2014.
“Only value-added textile sector exporting units had an accumulated pending refund of about Rs30 billion during last year,” said an official of All Pakistan Textile Mills Association (Aptma).
“Total outstanding sales tax and income tax refunds of the basic textile sector amounted to Rs5.156 billion as on November 8, 214.”
The official said the tax authorities have held payments up to 50 percent of sales tax refunds or Rs3.570 billion, while the payments against income tax are Rs1.585 billion.
Jawed Bilwani, chairman Pakistan Apparel Forum said textiles exporters are paying two percent sales tax and 0.25 percent export development levy after the government withdrawn zero-rated regime facility for the five major export-oriented sectors.
“Textile industry is already on the verge of collapse due to energy crisis and high production cost,” Bilwani said, adding that non-repayments of the refunds have forced the industry to cut their working capital.
Shabbir Ahmed, chairman Pakistan Bedwear Exporters Association also criticized the performance of Pakistan Revenue Automation Limited (PRAL) saying at least 75 percent refund cases of the bedwear exporters are deferred by this computerised system, resulting genuine exporters money in billions are blocked.