Continuing to allow zero rated sales tax on local supplies and import of raw materials by the Federal Board of Revenue (FBR) is indeed a most pragmatic step which has greatly relieved the five zero rated export sectors, said M Jawed Bilwani, Co-ordinator, Council of All Pakistan Textile Associations (CAPTA).
Jawed Bilwani lauded the right decision of the FBR for continuing zero rating of sales tax which, he said, was the step in the right direction and should be kept continued because it has proved most beneficial. He articulated that among the five zero rated export sectors, textiles was the largest contributor of foreign exchange to the nation. He emphasised the fact that when zero rating of sales tax on the five export sectors was introduced in 2005, it was precisely done after marathon discussions and sessions FBR held with the major stakeholders after studying all the pros and cons after which SRO 535(I)/2005 and SRO 536 536(I)/2005 dated 6th June, 2005 was issued wherein list of 357 items were given. Again after discussions with the stakeholders these were superseded by SRO 621(I)/2005 dated 17th June, 2005 wherein 152 items were shortlist. Later on vide SRO 509(I)/2007 dated 9th June, 2007 the list was further reduced to 141 items.
The main criteria being that only those items whose use by the five zero rated export sectors is 70 percent and above of the total use of these items in Pakistan to be included in the list. This step by FBR not only greatly boosted the exports of the five zero rated export sectors but proved in generating huge revenue to the national exchequer.
After several meetings and appeals by the major stakeholders of the Five Zero Rated Export Sectors (CAPTA), the FBR vide SRO 283(I)/2011 dated 1st April, 2011 continued zero rating of sales tax which included 184 items. The stakeholders later convinced the FBR of the main criteria after which SRO 323(I)/2011 dated 27th April, 2011 was issued short-listing 127 items whose use by the five zero rated export sectors is 70 percent and above of the total use of these items in Pakistan. Furthermore, three items viz: Titanium Dioxide, Caustic Soda (liquid) and Flakes+Pearl and Sodium Silicate must also be included as the use of these items is 70 percent and above of the total use of these items in Pakistan.-PR