Prime Minister Imran Khan in a meeting with Textile Industry Representatives told that the government has serious intentions to resolve its concerns of the sector, however, revival of the zero-rating regime is no more an option in the existing situation.
In the new Finance Bill 2019 comprising of budgetary Measures, the government withdrew the zero-rated regime for 5 sectors including leather, textile, carpets, surgical goods and sports. A standard sales tax of 17% has been imposed items of these catgories.
In the meeting was President of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) Daroo Khan Achakzai along with a delegation of Textile Sector.
Prime Minister assured the delegation that the genuine issues of the Sector will be taken up by the government for resolution.
What is the Sales Tax issue of Textile Sector
The textile sector exports around 80% of its products. Textile owners believe that collecting sales tax on the remaining 20% doesn’t seem feasible. The textile sector has proposed to the government to receive tax from textile products being sold in the local market while registering wholesale and retail sectors. Thus disturbing the textile manufacturing sector for 20% doesn’t seem to be a wise decision.
The textile sector is already facing liquidity shortage as around Rs. 200 billion worth of Sales tax refunds are stuck with FBR.
Earlier, the delegation met Chairman FBR and Advisor to PM on Finance and Economy to discuss various issues related to Finance Bill, 2019.