Pakistan Tanners Association Chairman, Khawaja M Yousuf, has urged the Finance Minister to help the leather exporters play their viable role in boosting exports in the present era of tough competition. Expressing his mixed feelings on the impact of the Federal Budget for the year 2005-06, Khawaja M Yousuf termed it beneficial for the leather sector to some extent.
In a statement, he appreciated the encouraging decision for zero rating leather and articles thereof under PCT Headings 41.04 to 41.15 as well as zero rating Customs duty for manufacturing the same at import stage to do away with duty drawback refund claims.
However, tanners have large inventories, both in the form of chemical as well as leather made up of duty-paid chemicals, therefore the process of duty drawback and sales tax must continue at least until 31st December 2005 to dispose of tax paid stock within six months.
These steps as well as following incentives will go a long way in reducing the cost of production to have competitive edge in the world market for leather industry:-
-- Duties on dyes and chemicals for 96 items have been reduced to 5 percent, 10 percent, 15 percent and & 20 percent. However, these items need to be specified.
-- Time limit for temporary importation under SRO 410 extended up to 30th June 2006.
-- Duty on machinery, equipment and spare parts for setting up, balancing, modernisation or replacement of industry kept at 5 percent.
-- Import of raw materials and parts used in manufacturing of plants and machinery zero-rated for sales tax purpose.
Apart from above, the budget has some negative impact on the proposals announced, like increase in Withholding Tax by 0.25 percent on export proceeds and 0.1 percent Withholding Tax levied on withdrawal of cash from banks for Rs 25,000/- and above which need to be reviewed and withdrawn.
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