Five export-oriented sectors: restriction lifted on input tax adjustment/refund from packing material

To promote exports, the government has lifted restriction on input tax adjustment/refund from packing material of five export-oriented sectors including textile industry. Explaining impact of sales tax measure on textile/exports sector, Arshad Shehzad informed that restriction made on input tax adjustment/refund on packing material is going to be removed.
The restriction was introduced through SRO condition 'X' of the SRO 491(i)/2016 on the pretext of restoration of zero rating facility to entire textile supply chain by the board with the negotiation with trade bodies. However, due to constant increase of cost of doing business and country decreasing exports, the government has now seems to realize that disallowance / restriction of input tax on packing material will only eventually increase the cost of goods sold of the exporter. It is indicated under the salient features of the budget that board may issue amending notification at the start of new fiscal year to remove this anomaly.
It is important to note that restriction of input tax was already challenged by the exporters before the court of law and favourable interim orders are already operative against the government on this issue. The application of further sales tax on supplies of finished fabric is also indicated to be notified @ 1%, through amendment in SRO 1125(i)2011. The rates of further sales tax on textile was notified through SRO 584(i)/2017 where further sales tax @ 1% was made applicable on industrial input and further sales tax @ 2% was made applicable on finished article. Since finished fabric is not defined in the notification under the head of finished article, the further sales tax was charged @ 1% on supplies of finished fabric.
The board recently through a clarification letter requires application of further sales tax @ 2% on supplies of Finished Fabric. The clarification seems against the preposition of law and now it was indicated through salient features, that board may made further sales tax @ 1% on supplies of finished fabric to unregistered person through a budgetary notification.
The rate of sales tax on retail sectors of the textile and leather article are indicted to be increased from existing 6% to 9% through a budgetary notification. However, the retailers opting transmission of their sales data on real time bases to FBR through integration were remain chargeable to sales tax @ 6%. All these measure are supposed to be notified through issuance of subsequent notifications by the board, Arshad Shehzad added.