Exporters-cum-makers of textile products: PHMA proposes no payment, no refund system

Pakistan Hosiery Manufacturers Association (PHMA) has proposed no payment, no refund system for the exporters-cum-manufacturers of textile products to check tax frauds and improve sales tax collection from next fiscal (2013-14). According to the budget proposal of the PHMA to the Federal Board of Revenue (FBR), here on Saturday, more than 80 percent of the exporters-cum-manufacturers are required to be under the Zero Rated Tax Regime.
In this regard, the association has proposed that input purchases by such exporters-cum-manufacturers of the previous year be capped and in case the purchases cross this limit such exporters-cum-manufacturers to be asked for justification of extending the limit of purchases as compared to previous year. For the justification of increase, exporters could produce the details of orders they have received from their foreign buyers and purchases of local material accrued as a result. As it is, all the almost 80 percent of the exporters-cum-manufacturers are consumers of electricity, gas, water etc and are able to produce bills of these utilities consumed by them as justification against which a Certificate of Zero Rating be issued. Similarly, on providing of such Certificates to the Service Providers, Zero Rating facility can be obtained by such exporters-cum-manufacturers.
On receiving of such justification the exporters-cum-manufacturers should be allowed Zero Rating of taxes for the increase in their exports. With regards to exporters-cum-manufacturers on providing of similar justification, they should be allowed zero rating of taxes. With regards to wastage, the data is already available with FBR as certain percentage has already been fixed for weaving, knitting, stitching, cutting, dyeing etc.