Aptma hails zero-rated sales tax on ginned cotton

The zero-rated sales tax on ginned cotton is a landmark decision which would give sudden boost to exports and would add up to $2 billion in total exports, All Pakistan Textile Mills (Aptma) Chairman Waqar Monnoo said on Tuesday.
He was addressing a press conference to express views of textile miller-owners over the budget 2004-05.
"The generalisation of sales tax and elimination of sales tax on ginned cotton would produce enough liquidity to increase the quantity of our exports," Monnoo said.
While appreciating the budget, he said, the government has accepted our major demands and the removal of painful further tax was one of them.
"It has taken us months to convince the authorities that zero-rated sales tax on ginned cotton would relieve the exporters by a considerable margin in the quantum of refunds," he said.
However, it is need to be clear that the sales tax on imported cotton has also been abolished.
Restrictions on input tax claims against diesel and other items like cables and wires, building materials, electrical and gas appliances, etc, has been done away with.
New Sales Tax Refund Rules have been framed in the Sales Tax Procedures Rules 2004. Though zero-rated on ginned cotton would resolve the blockage of refunds, but for members consuming higher proportions of Man Made Fibre (MMF), timely refund processing is still a burning issue, he said.
Monnoo said that a new SRO has been issued which requires only the textile industries to furnish monthly details of sales and purchases made by both registered and unregistered people. "We will discuss the matter with the related authorities," he said.
He said: "We commend the rationalisation of customs duty on capital goods, machinery and dispensing with the conditions of indemnity bond and installation certificates is also a laudable step. Duty on dyes has been reduced to 15 percent and plant and machinery for power generation will be zero-rated. This is very encouraging," he said.
He said the duty structure on raw materials used by the textile industry has not been rationalised as per our proposals, which needs government attention.
At present, the duty on acrylic/modacrylic (tow) and acrylic/modacrylic (fibre) is 20 percent, which we have proposed to the CBR to lower down to 5 percent. Instead of reducing duty on tow and fibre, duty on acrylic tops is reduced to 10 percent.
This has created an anomaly, as duty structure is kept higher for tops than the primary raw materials.
He said that the exemption of withholding tax on written-off mark-ups on loans is also a positive change for the revival of sick industries.