All Pakistan Textile Mills Association (Aptma) has proposed to the Federal Board of Revenue (FBR) to introduce the concept of "deemed duty drawback" where duty drawback be given without payment of customs duty on the import of raw materials consumed in export products.
Sources in Aptma told Business Recorder on Tuesday that the concept of "deemed drawback" needs to be introduced so that the exports could be zero-rated. The "deemed drawback" means that the repayment of duty be granted without paying import duty on raw materials used in the export goods. There is a need to re-introduce the concept of "deemed drawback" to zero-rate the exports.
Sources said that the repayment of customs duty on the import of raw materials used in the manufacturing of export goods should be given to the textile units. The duty drawback should be paid to the exporters to compensate the textile units by reducing cost of doing business.
According to the budget proposals of the Aptma, it has been proposed to allow duty drawback on yarn at the rate of 3-5pc, Greig Fabric @ 4.5pc of the turnover value and to the downstream sector on cascading basis.
The following taxes, duties and other levies are being charged from the industry and exporters which has multiplier effect on the textile value chain and further add to the cost of doing business to the extent of 3 to 5 percent of the turnover across the textile value chain. The textile industry be compensated this impact of taxes and levies on cascading basis.
In case of federal taxes, industry is liable to pay withholding tax @ 1pc; customs duty on machinery and spares varies from 5 to 25pc; 4.5pc customs duty on polyester staple fiber and import duty/surcharge on consumption of diesel/furnace oil. The provincial taxes included 0.2pc stamp duty on local sales/exports/import bill of exchange and Sindh infrastructure tax on import @ 0.825pc. Besides, professional tax, market committee tax etc.