A tug of war on the possible blockage of money with FBR under 'reformed general sales tax' (RGST) has started between the All Pakistan Textile Mills Association (Aptma) and the Federal Board of Revenue (FBR). An amount of Rs 500 billion is disputed between the two sides as FBR chief Suhail Ahmad has pinpointed Aptma stance of having stuck up this heavy amount with the tax system under the RGST annually is out of question.
He has further clarified that the government would have to pay Rs 127 billion as refunds to the textile sector under the RGST. Aptma, on the other hand, is of the view that they haven't challenged Rs 127 billion refunds amount. But so far as the amount being stuck up in the system due to repeated deduction of 15 percent under the RGST is concerned is not only true but they apprehend that this amount may multiply further if utility, spare and packing material charges are accounted for by the industry, which amounts to 30 percent of total cost.
Further, the Aptma has also expressed fear that the turnover amount to be stuck up in the system would be Rs 135 trillion annually under RGST. Aptma Chairman Gohar Ejaz also pointed out that the textile industry would lead to abyss, as the banking industry does not finance the taxation part of the liquidity. According to him, the industry would be unable to procure raw material with sanctioned limits missing taxation part of the liquidity.
Lack of infrastructure for RGST collection, long chain of supply, delay in refunds issuance, use of seasonal raw materials by textile industry are added impediments if zero rating regime is withdrawn from textile industry, he said. Further, he said, it would affect exports and competitiveness of price of textile articles in local market.
According to him, 30 percent of textile industry is in unorganised sector and about Rs 2 million per month are stuck up even under the present zero rated regime. Gohar also pointed out that RGST would adversely affect balance of payments and trade. It may lead to textile industry collapse, since 80 percent of its total output is currently exported. He said unemployment would increase and RGST would encourage unregistered/unorganised sector, besides giving rise to corruption and unfair practices. Therefore, he said, local supply of textiles and articles should be zero rated in RGST in line with current Sales Tax Act, 1990.
Also, he said, all inputs and services in textile industry should be zero rated to avoid refunds and flying invoices, as 80 percent of textile products are being exported in one form or the other. He stressed that the premise on the basis of which Aptma has put forth serious concerns on withdrawal of zero rating regime on exporting sub-sectors is based on facts, and nothing is being exaggerated at all.
Comments
Comments are closed.