Value-added textile sector seeks early release of Rs300bn ST refunds

KARACHI: The value-added textile sector on Thursday stepped up to seek an immediate release of an estimated Rs300 billion of sales tax refunds worth, which the federal government continues to hold back, causing a liquidity disaster for the exporters to carry on productions amid political and economic crisis.

“The government will be held completely responsible for closure of industries, flight of capital and massive unemployment,” in the wake of industries closures from the financial crunch, Muhammad Jawed Bilwani, Chairman, Pakistan Apparel Forum told a joint press conference held at the PHMA House.

He said ‘excessive’ and ‘unjustified’ delays in the release of sales tax refunds is causing disruption in export-production “Reportedly, several small and medium export industries have stopped production due to the liquidity crunch,” he said.

He said the value-added textile exporters demand of the government for its “genuine support and assurance” to release the sales tax refunds within 72 hours as per the rules.

He also sought the government’s pledge to restore the ‘GST Zero-Rating No Payment No Refund system’ for five export-oriented sectors in line with the SRO-1125. He warned that any failures on part of the government may trigger a flight of capital from Pakistan.

“The government should restore ‘GST No-Payment, No-Refund System’ previously regulated under SRO-1125 for five export-oriented sector in the wake of economic uncertainty and political unrest,” Bilwani said.

He cast doubts over the government’s ability to fulfil its commitments and promises to release the refunds ‘promptly’ to the exporters.

Delays in the GST refunds despite the approved Electronic Refund Payment Orders (ERPOs) have left exporters perturbed with financial problems, he said that “delays are the violation of Rule 39F of the Sales Tax Rule 2006”.

Chairman Pakistan Apparel Forum said that requests made to the FBR for an urgently release of refunds as per the law and rules remained unheard.

These associations approached the high-ups in Islamabad in this connection but failed to receive any positive nod, he said that “according to an estimate the stuck sales tax refunds claims amount comes to around Rs300 billion”.

“The devaluation of Pak rupee against the dollar by approximately 18 percent has impacted an increased the cost of industrial input besides further hike in GST,” he added.

The value-added textile export sector requests to Prime Minister Shahbaz Sharif and Finance Minister Ishaq Dar for an immediate intervention to help release the sales tax refunds. The sector also sought a favour from the government to ensure such huge delays in the release of refunds may not occur in the future.

Khizer Mehboob Zonal Chairman, Pakistan Hosiery Manufacturers & Exporters Association (PHMA), Rafiq Godil, chairman, Pakistan Knitwear & Sweaters Exporters Association, Shaikh Shafiq, Former Chairman, Pakistan Readymade Garments Manufacturers & Exporters Association, Khawaja Usman, former chairman, Pakistan Cotton Fashion Apparel Manufacturers & Exporters Association, Rehmat Naveed Elahi, chairman, Pakistan Bedwear Exporters Association, Abdus Samad, Former Chairman, Pakistan Cloth Merchants Association and Tahir Jehangir, chairman, Towel Manufacturers’ Association of Pakistan.

Representatives of Pakistan Denim Manufacturers & Exporters Association & All Pakistan Textile Processing Mills Association and various leading Valued-Added Textile Exporters were also present during the joint press conference.

Copyright Business Recorder, 2022