M Iqbal Mandavia, Central Chairman, Pakistan Yarn Merchant Association (PYMA) has expressed its concern over the reformed general sales tax which they believe may destroy the textile industry and hamper exports.
According to industry estimates, there would be an immediate liquidity crunch if the reformed GST was introduced in the textile industry. Rs 100 billion would remain stuck with the Sales Tax Department, leading to another circular debt. The industry fears that it may perish due to high interest rates, cotton shortage and higher prices of Cotton/ PC yarn.
According to the PYMA Central Chairman, Iqbal Mandavia, abolition of zero-rating regime for the textile industry will slow down the efforts to increase the country's exports at a time when the economy is suffering under the impact of the terrible flood disaster.
Along with these concerns expressed by the Chairman, PYMA members have voiced their concern that the bureaucracy wants to introduce reformed GST refund system for export industry to allow for more corruption and misuse of GST.
The members feel that there was no logic behind first collecting the GST and then returning the amount in refund claims. This would have an adverse impact on the industry's working capital because huge funds would be blocked for at least six months.
The reintroduction of the refund system by removing zero rating of GST for export industry will only open up floodgates of corruption and misuse at the cost of export industry. The members have also voiced their concerns over the distressing situation of the economy and that even banks are reluctant to give working capital without security. This will result in shrinking industrial activity and exports.
In the past when there was a refund system, the government used to give more towards claims through fake invoices than collecting any revenue. The government should tax those who are not paying and should not over burden those who are already paying their due taxes.-PR
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