The Federal Board of Revenue (FBR) has given assurance to the textile sector for devising some viable mechanism to address the issues of refunds under the new system of 'reformed general sales tax'. Sources told Business Recorder here on Tuesday that the issue of sales tax refunds under the Expeditious Refund System was discussed threadbare during the meeting of subcommittee of the National Assembly standing committee on finance held here at the FBR House.
The meeting discussed the figures worked out by the textile sector relating to the accumulation of refunds due to imposition of the tax on the entire supply chain. The FBR showed its willingness to examine the existing sales tax refund system for chalking out modalities to streamline the refund payment system for the textile sector.
During the committee proceedings, the subcommittee directed the Federal Board of Revenue (FBR) to address the concerns of the textile associations during the implementation of the Reformed General Sales Tax (RGST) Bill 2010, sources added. The meeting was chaired by MNA Shahnaz Wazir Ali on December 7, 2010. The meeting was attended by MNAs Kashmala Tariq and Rashid Godil, Aptma Chairman Gohar Ejaz, , Zubair Motiwala, Chairman CAPTA, representatives of several textile sector associations, Chairman FBR and FBR officers.
Several issues relating to the five zero-rated sectors (textile, leather, carpets, surgical goods and sports) and RGST were discussed extensively. The associations presented their points of view and requested that zero-rating be continued under the existing sales tax regime, since removing zero-rating would lead to liquidity issues for these sectors. They requested that the intermediary stages should not be taxed and some other mechanism may be devised to collect taxes on the domestic sales of these sectors preferably at the retail stage.
There was consensus that exports of these five sectors should remain zero-rated, whereas the domestic sales need to be taxed. The subcommittee appreciated the concerns of the textile associations and the need to facilitate the sector since it represented a major share of Pakistan's exports.
The discussions of the subcommittee with the representatives of these sectors shall continue in the next meeting of the subcommittee December 11, 2010. Shahnaz Wazir Ali requested FBR and the representatives of the associations to present definite proposals on how the exports of these sectors could be facilitated and the local consumption brought into the tax net, in the next meeting, to help the subcommittee firm up its views.
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