LAHORE: The value-added export-oriented textile industry is facing an extreme financial crunch as its major portion of liquidity remains stuck due to delay in release of sales tax refunds for the last four months by the Federal Board of Revenue and just a meagre amount has been released last week.
These concerns were raised by the executive committee members of the Pakistan Readymade Garments Manufacturers and Exporters Association with its Zonal Chairman Dr Ayyaz Uddin in the chair.
The meeting was called to ponder on the financial crisis faced by the garment exporters due to long delay in ST refunds.
The participants of the meeting said that the FBR did not release any fund in October and has now committed to release funds for RPO’s, issued until September 30. Thus only funds for the month of July will be released, as almost all of the RPO’s for August were issued up to 10th October.
“We request the FBR to extend RPO dates to 10th of every month” demanded PRGMEA chairman. He said that the exporters are solely dependent on timely-refunds to manage their cash flow effectively. “The FBR’s failure to fulfil its commitments has put the undue pressure on the value-added textile industry at a time when we can least afford it.”
Dr Ayyaz Uddin said the steps being taken by the tax agency are commendable but since it had been agreed to release the refunds within 72 hours, the best course would have been to clear all the pending export claims, as the refunds of sales tax of over Rs4 billion collected in previous month of October could not be paid even four weeks after the due date.
The PRGMEA North Zone Chairman, expressing gratitude for the release of some amount of sales tax refunds, called for a speedy disbursement of the remaining substantial figure of ST refunds pending for the last four months.
Dr Ayyaz Uddin observed that during a meeting with the PRGMEA, the Member of Inland Revenue in April this year it was agreed that the sales tax refunds would be issued by the 10th of every proceeding month but this commitment of the FBR has not been fulfilled yet.
“Effectively now the exporters will have four months of their cash blocked by the FBR. The four months delay of working capital for the exporters is totally unfair, unjust and also unacceptable, as it will ultimately hamper the exports growth and inflow of precious foreign exchange,” the PRGMEA EC members added.
“We welcomes directives of the Prime Minister Shehbaz Sharif and Finance Minister Aurangzeb to the Federal Board of Revenue to clear all pending refunds of exporters, removing bottlenecks from the new refund payment system of the FBR,” the chairman said.
He asked the PM to also get his directives implemented on immediate basis and in their true spirit, as the exporters especially of SME sector, are facing a severe liquidity crunch due to delay in payment of sales tax refunds despite launch of the new system by the FBR.
Copyright Business Recorder, 2024