Yielding to a major demand of textile sector, the government has withdrawn Presumptive Tax Regime (PTR) and reduced income tax on export proceeds from 1.25 percent to 0.5 percent under the normal income tax law.
Sources told Business Recorder on Wednesday that the Central Board of Revenue (CBR) and All Pakistan Textile Mills Association (Aptma) held a detailed meeting at the CBR Headquarters before they met prime minister Shaukat Aziz. The meeting reviewed textile industry''s proposals particularly those relating to sales tax and customs duty.
During the meeting, CBR Chairman M. Abdullah Yusuf and Aptma representatives reached consensus on the withdrawal of the PTR. Later, their decision was duly endorsed by the prime minister. Sources said the textile sector is out of the Presumptive Tax Regime and a formal amendment in this regard would be announced in the 2007-08 budget.
Under the new arrangement, the CBR would carry out normal income tax assessments of the textile companies under the Income Tax Ordinance, 2001. Second, the income tax at the rate of 0.5 percent would be applicable to the export proceeds of the textile companies. Third, a 100 percent depreciation allowance would be available on machinery and equipment from July 1, 2007.
They said the CBR had accepted most of the demands of the textile sector. The industry had demanded the withdrawal of presumptive tax regime at both the export and the local stages, but the board permitted the application of normal income tax law in case of export proceeds.
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