Pakistan Textile Exporters Association (PTEA) has called for zero-rating sales tax facility on export oriented textile chain, as huge amounts stuck up in refund regime has squeezed the financial streams and are breading the cash flow jerks for textile exports.
Talking to newsmen, Chairman PTEA Sohail Pasha termed liquidity crunch as a stumbling block in export promotion. Textile industry is facing unprecedented crisis since many years and consequently, sizeable textile capacity had been severely impaired. Textile exports in quantity and value terms could not get the momentum and remained below the targets. Although GSP Plus window has increased the flow of orders to textile sector but lack of necessary funds and energy shortage has adversely hit the outcomes of this duty waiver relief, they argued.
They termed withdrawal of zero rating and imposition of sales tax a detrimental to the business activities as around 80 percent of textile produce is exported in one or the other form, with only 20 percent left for local consumption. Therefore, zero rating of the entire value chain for the export is imperative to remain competitive in the international market. Textile Industry was made zero rated on the pattern of "no tax-no refund" in order to get rid of numerous complaints and irregularities.
Exporters have been dragged into the vicious circle of payment of sales tax and claiming refunds by incorporating changes in SRO 1125(I)/2011. Initially, five export sectors were declared zero-rated but subsequently the facility of zero-rating has been gradually withdrawn. SRO 1125(I)/2011 should be restored to its original status to declare textile export sector as zero rated, they emphasised.