Despite of assurances in budget meetings held with ministers and officials from the government the zero-rating currently regulated under SRO taxation system has not been transformed to an Act, Pakistan Apparel Forum Chairman Jawed Bilwani and Office Bearers Rafiq Godil, Khawaja Usman, Sheikh Shafiq and Riaz Ahmed stated.
Pakistan Apparel Forum, in joint budget proposals, to inculcate new confidence to exporters, gave recommendations to continue Zero-Rating and transform it into an Act from currently SRO taxation system whereby the meeting on budget chaired by Finance Minister gave assurances but not implemented. They urged to Government convert the Zero-Rating under SRO 1125 to an Act as assured.
They articulated that the Government in annual Budgets from year 2014 to 2017 allocated funds for refunds but payments were not made. Under Prime Minister's Export package of 180 Billion, in this budget under Duty Drawback on Taxes, only 4 billion were allocated which shows textile as a less-priority area for the Govt. Whereas, as per annual Export estimate and careful observation the said allocation should be worth about 35 billion, they observed.
They voiced that for Textile Industry the Budget was disappointing. As usual, the Government ignored the Budget proposals of Associations. To enhance exports, the Government must accord importance to the recommendations of exporters. The Associations have submitted the Budget Proposals directly to the Federal Commerce Minister and Finance Minister in various meetings, in addition to sending to Ministries. It is the responsibility of the Government to provide level playing field and create enabling business environment. Due to inordinate delays in payment of refunds the problems of exporters have been multiplied. The Government itself is not adhering to the Sales Tax Rules 2006 under which after approval of claims payments cannot be delayed, they expressed concern. Refunds approved last year have not been paid till date. How could the newly allocated funds for refunds shall be released on given dates? they questioned. No practical steps and measures have been taken to decrease the cost of manufacturing. Higher cost of manufacturing, delays in refunds, higher tariffs of power and gas, lack of business friendly environment are the main causes of decline in exports, they added.
They stated that textile sector which contributes to 8 percent of national GDP has not been given deserving importance. As compared to last year, there is a negative growth of 0.92 percent from July to April which reflects non-seriousness of the Government towards the sector. The contribution of Industries in GDPs of Pakistan, Bangladesh and India is near about same, however, the share of export in the GDP of India is 10.73 percent, in Bangladesh 13.92 percent and in Pakistan it is 6.34 percent only. The export policies of Pakistan towards enhancement of export are not realistic and balanced. Every year the stakeholders are invited in pre-budget meetings, their proposals are sought and appreciated, assurances are given to incorporate proposals in budget but to no avail.
Expressing reservations, they stated that the Finance Minister in Budget speech 2014-15 announced all sales tax refunds claims of exporters shall be released by 30th September 2014 and promised that in future all admissible refund claims of exporters shall be disposed off within 03-months. In budget speech 2015-16 Finance Minister stated that the refunds due to the export oriented sectors relating to tax periods till 31st May 2015 shall be issued by 31st August 2015. Finance Minister in Budget speech 2016-17 stated that all sales tax refunds till 30th April, whose RPOs have been approved, will be paid by 31st August 2016. In his last budget speech 2017-18, Finance Minister, spoke that all the pending sales tax refunds whose RPOs have been sanctioned by 30th April 2017 shall be paid in two parts. RPOs up to the value of Rs 1 million will be paid till 15th July and the remaining RPOs will be paid till 14th August 2017. In spite of announcement in Budget speeches the refunds have not been made till date. Rule 26A of Sales Tax Rules 2006 refers to expeditious processing and payment of refunds. To process said claims FBR IT Risk Management System (RMS) within two days of refund submission will automatically process said claim amount under no objection and will generate RPO of cleared amount. Subsequently, concerned RTO will arrange issuance of cheques for cleared amount in seven working days. Contrary to Law, the Government has caused inordinate delays in payment of refunds.
They stated that inordinate delays in refunds of exporters in respect to their Sales Tax refunds, Customs Rebates, DLTL claims, income tax refunds, problems of exporters increased to manifold and exports have also declined. Under Textile Policy Rs 5 billion were allocated while under Duty Drawback on taxes Rs 4 Billion were allocated. In PML-N the textile remained a low priority area. In Budget 2014-15 Rs 6 billion were allocated under textile policy but released only 4.84 billion. Likewise, in 2015-16 budget Rs 6 Billion were allocated and in 2016-17 another Rs 6 billion were allocated but were never released. -PR