FAISALABAD: Undue delay in payment of exporters’ sales tax refunds against approved Refund Payment Orders (RPOs) is adversely impacting the export cycle as exporters’ liquidity have already taken a strong negative hit from adverse impacts of global recession. Government must take immediate measures to ease off the financial stress and gear up the export growth.
In a statement here on Wednesday, Patron-in-Chief Pakistan Textile Exporters Association (PTEA) Khurram Mukhtar expressed serious concerns over unnecessary delay in payment of exporters’ sales tax refunds. Appreciating the announcement for payment of RPOs issued till 2nd of October, he said that timely payment of sales tax refunds is still a major issue.
Despite all the commitments, FBR had failed to pay the sales tax refunds of zero rated sectors within 72 hours as payment of exporters’ refund claims have been stopped from over a month. Outstanding sales tax refunds volume has crossed billions and exporters are facing severe financial hardship leading to a disruption in export production, he said.
Textile exporters are stranded in the middle of nowhere and cannot decide about the future of their businesses in a scenario when the global business is facing a slowdown. Referring the Rule 39F of the Sales Tax Act 2006, he said that sales tax refund claims for which approved ERPOs are issued will be paid within 72 hours but funds have been stopped for more than a month.
Textile industry is already under pressure in the current uncertain times, where export orders are dwindling due to the global recession. Delay in payment of sales tax refunds will only make matters worse.
Government must take stock of the situation and make the sales tax refund payments as the textile sector plays a pivotal role in the economy and accounts for over 60% of exports. He emphasized that sales tax refunds should be cleared immediately because further delay would dent the liquidity of textile exporters, which would disturb the flow of working capital.
PTEA’s patron-in-chief was of the view that textile export industry has entered into a sustainable economic growth phase; however, emergence of an economic crisis will be an instant setback, coupled with rising manufacturing expenses, squeezed financial assistance, escalating prices and shortage of raw material are among various factors which may hit the growing trend.
Pointing out the grim economic situation, he said that textile industry, which comprises 46 percent of the total manufacturing sector, provides employment to around 15 million Pakistanis contributes 8.5 percent to the GDP, is the industry that can lead the economy out of crisis. A sustainable and inclusive economic growth is the key to a strong and vibrant Pakistan, which can open the door for development and prosperity.
He stressed for immediate payment of all outstanding refunds to steam up the industrialization and increase in exports. Release of refunds will definitely be a sigh of relief for textile exporters, he added.
Copyright Business Recorder, 2022