Textile exporters have welcomed the federal budget in a big way for freeing the export sector from the sales tax regime, which was their long outstanding demand. Council of Textile Associations (CTA) chairman Wajid Jawad said here on Monday it would not only greatly ease liquidity position of exporters, who had billions of rupees stuck up in sales tax refunds, but would also eliminate corruption in the form of fraudulent refunds obtained on bogus exports.
He also welcomed reduction in duty on import of accessories used in plants for manufacturing textile products. Wajid did not criticise imposition of 0.1 percent withholding tax on withdrawal of bank amounts exceeding Rs25,000 and said the marginal tax would be adjustable.
Towel Manufacturers Association (TMA) founder chairman S.M.A. Rizvi in his comments described the budget as positive, especially with regard to measures taken to introduce sales tax-free regime and reduction in duty on machinery and raw materials but said the budget would not help arrest rising inflation.
He advised the government not to base its plans on increased cotton production, which might not achieve the same level of production as was witnessed this year.
He said the country could have earned Rs 2 billion more had the exported raw cotton converted into finished textile products.
He also complained about lack of sufficient funds allocation for technical education in the country.
Karachi Chamber of Commerce and Industry (KCCI) export sub-committee chairman Muhammad Iqbal Mangrani has lauded reduction in customs duty on full chain of polyester yarn products used for blending with cotton in manufacturing of fabrics and said it would give a big boost to textile exports.
He said import duty on polyester staple fiber (PSF) had been reduced to 6.5 percent from 20 percent and on raw material on PTA and MEG used in manufacturing of PSF.
He also welcomed the step of putting export sector under the zero-rated sales tax regime and said it would boost working capital of exporters and would also save huge revenue losses to the government earlier caused through fraudulent sales tax refunds.
A leading exporter and Garment City board of directors member Aziz Memon described the new federal budget as revolutionary which, for the first time, has relieved exporters of cumbersome sales tax refund regime, which blocked their money for months and consumed all their energies in getting their money back.
He did not criticise increase of income tax on exporters from 0.5 to 0.25 percent, as he said exporters incurred huge cost on purchase of raw materials by paying 15 percent sales tax. They also had to keep staff for managing sales tax refund procedures.
He also welcomed duty-free import of parts and accessories for textile plants and extending the duty-free import facility to exporters under SRO 410 for another year.
The Pakistan Cloth Merchants Association (PCMA) central chairman has welcomed zero sales tax regime announced in the new budget and said it would reduce input cost of exporters and would help them in competing in textile trade under the WTO.
He said extension of SRO 410 meant for duty-free import of accessories for export manufacturing for another year was a fulfilment of a long outstanding demand of exporters and would go a long way in boosting exports.
Jawed congratulated Prime Minister Shaukat Aziz for presenting a business-friendly and investors-oriented budget.
Former PCMA chairman Ghulam Ahmed Ismail and a leading cloth exporter criticised the government for increasing income tax on exports and said exporters were already bearing increased labour costs to meet the WTO standards under the textile quota-free regime.
He welcomed the sales tax-free regime for exporters and extension of duty-free import facility for exporters under SRO 410 for one year but feared that measures announced in the new budget would lead to further increase in inflation.
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