Delay in sales tax refunds worries exporters

KARACHI: The Value-Added Textile Exporters have showed dismay over delays in release of their sales tax refunds worth billions of rupee against approved refunds payment orders (RPOs), saying the slow-down was causing them financial hardships and a liquidity crunch.

The exporters informed that more than 2-3 weeks had passed after approval of RPOs, but payment against their approved claims was not made by the government, which was supposed to be released in 72 hours.

“Billions of rupees of exporters in sales tax are held up with the FBR [Federal Board of Revenue], as a result, we are facing severest financial hardships and are unable to procure materials/inputs for manufacturing goods meant for exports,” said Muhammad Jawed Bilwani, chairman, Pakistan Apparel Forum, chief coordinator, Value-Added Textiles Associations, and former chairman of Pakistan Hosiery Manufacturers and Exporters Association in a statement Wednesday.

He stated that running capital of the exporters was diminishing and they were compelled to buy input goods on credit. Exporters were not able to quote rates to their foreign buyers, he added.

Bilwani was of the view that recent economic uncertainty and political unrest had negatively affected almost all segments of the economy, mainly the exports. Previously, he said, the value-added textile exports witnessed a great enhancement in export growth of 27.60 percent for the month of July-August 2021 (FY-2021-22), which has faced a downfall of 23.85 percent and reached the level of 3.75 percent for the month of July-August 2022 (FY-2022-23).

He termed the government responsible for textile exports' downfall amid the delays in refunds to exporters, high cost of utilities and production, and an unviable business environment.

In spite of great agitation and resistance, Bilwani said, the then government had imposed 17 percent GST on the previously zero-rated textile sector.