Yarn merchants body seeks cut in sales tax

The Gujranwala Art Silk Yarn Merchants Association has suggested the government to slash sales tax from 20 percent to 15 percent at source on H.S. Code number 5403.3100 and equalise it with other H.S. Codes 5403.3200 and 5403.4100 in order to eliminate the discrimination among these codes.
The association also demanded withdrawal of five-percent existing custom duty at source, while three percent additional sales tax should be levied on the commercial traders and commercial imports should be exempted from sales tax returns. Sales tax collected at source must be considered final.
Secretary General of the association Usman Younis also asked the finance minister, to invite the stakeholders prior to taking any decision. The association is concerned with item No 12 ie Yarn only.
Talking to Business Recorder here on Wednesday, Younis said that approximately 50 percent yarn imported by Afghanistan through Karachi transit Kabul, used to be unloaded at Gujranwala and empty containers reached Kabul.
Approximately, 30 percent yarn for transit to Kabul, usually unloaded at Peshawar and empty containers reached Kabul to complete the formality. Only 20 percent yarn of Afghanistan's total import via Karachi under ATT used to reach Kabul.
He was of the view that officials of CBR, Ministries for Finance & Commerce and public representatives are not aware of this practice.
"There is not even a single loom operating in Afghanistan, which could consume this yarn within its territory. Hundred percent yarn imported by Afghanistan, is smuggled to Bara, where 8,000-100,00 silk power looms are running on this yarn", he maintained.

He revealed that grey fabrics produced in Bara and all around, were transported to Gujranwala where those fabrics were processed (dyed, finished and packed) and supplied to the exporters and to the whole Pakistani markets.
One loom consumed at least 500-Kg daily and thus total consumption reached 40-50 metric tons. As a result, surplus quantities were smuggled to Gujranwala, thus causing loss to national exchequer to billion of rupees.
He said that importers of Gujranwala were paying five-percent custom duty, 20-percent sales tax and six-percent Income Tax.
This was absolutely unfair policy and under this situation they were failed to compete with the smuggled yarn in the market because the landing cost of the legal importers is 36.23 percent higher than the smuggled ones.
Due to this reason, legal imports had already been reduced considerably, Younis complained.
This discrimination should be removed on priority basis, he asserted. He also demanded of the government to take immediate note of the situation and provide relief to the ailing industry.