‘Refunds settlement to create Rs70bln in tax revenue’

KARACHI: The government could generate Rs70 billion in additional tax revenue if it immediately settles Rs127 billion in outstanding refund claims, textile exporters said on Monday.

“Settlement of refunds at once will bring about liquidity in the market for investment that would rev up textile units,” Jawed Bilwani, chairman of Pakistan Apparel Forum said, addressing a news conference.

Bilwani said small and medium enterprises that make 60 percent of the apparel sector rely on personal capital instead of bank financing to operate their businesses.

“If they get access to their funds, they would be able to compete with regional competitors and create jobs,” he added.

Government owes more than Rs127 billion of refunds to textile sector. Of that, alone apparel sector’s refunds amount to Rs61.02 billion.

“If government clears the stuck refunds at once, exports will significantly scale up,” Bilwani said.

Bilwani said the Federal Board of Revenue has enlisted seven to eight years old cases as deferred payments. Nearly all the cases in adjudication came in favour of exporters.

If government decides to resolve pending refunds cases within one month, they can be settled at the adjudication and federal Ombudsman levels.

Pakistan Apparel Forum’s chairman said Minister of State for Revenue Hammad Azhar assured the industrialists of resolving the refunds cases once and for all.

“But, it (government) didn’t contact us,” he said, calling for a refunds system on permanent basis to give exporters relief from a recurring problem.

Bilwani further said gas supply to industries resumed from Monday. Industrial activities had cut to almost half due to unavailability of gas for the past 17 days that affected exports. A 10 percent decline in exports from Karachi’s industries entails five percent negative fallout on national exports.

He called for release of nine billion rupees on account of drawback of local taxes and levy (DLTL). The government earmarked Rs10 billion for DLTL, and has so far released only one billion rupees.

Value-added textile exporters expressed concerns over the proposed government’s formula of clearing outstanding refunds claims in cash and bonds.

Rafiq Godil, a forum’s representative said government should allow encashment of the proposed three-year bond to help in creating liquidity for the industries.

Umair Noor, president of Pakistan Hosiery Manufacturers and Exporters Association southern zone said the government clears refunds for business expansion and the exporters should not ask for its settlement. Noor said exporters should be facilitated to get their refunds cleared.