The Ministry of Textile Industry has recommended Rs 29.761 billion tax relief incentive package for revival of the textile sector. It has demanded duty free imports of garments/home textile sectors accessories, reduction of tax on power looms, inclusion of Polyester Staple Fiber (PSF) in Duty and Tax Remission for Export (DTRE) scheme and abolition of all direct and indirect federal and provincial levies on the exporters.
Out of 32 recommendations made in the Tariq Saeed Saigol report of National Textile Strategy Committee, Textile Ministry has requested the federal government to give top priority to certain recommendations containing tax relief to the tune of Rs 29.761 billion.
Textile ministry has recommended zero rating of all exports keeping in view the best international practices. However, it recommended that import of accessories for the garment and home textile sectors should be made duty free. The financial impact would be around Rs 0.631 billion in case of few items only.
In the meantime duty drawback rates should be amended to incorporate incidence of import duty on polyester staple fibre, printing screens and castic soda, it said. It also recommended zero-rating of all direct and indirect federal and provincial levies to the exporters through introduction of a drawback mechanism. The relief would involve an amount of Rs 20.674 billion.
The ministry has also recommended inclusion of PSF into the Duty and Tax Remission for Export (DTRE) scheme and products exported containing PSF should be eligible for deemed duty drawback equivalent to protection enjoyed by the local manufacturers of PSF.
It also asked the government to reduce turnover tax from 1.25 percent to 0.5 percent on power looms. This recommendation would have revenue impact of Rs 0.10 billion. The Textile Ministry has recommendede waiver of prior permission requirement for import of raw material and has also included many other proposals.