The value-added textile sector has vehemently rejected the withdrawal of zero-rating of export sector by the government. The Chairman, Towel Manufacturers Association of Pakistan (TMA) South Zone, Syed Usman Ali said that the new measures taken by the government would open up a floodgate of corruption to the government officials and the trade.
"The menace of flying invoices will flourish in the country once again and opening up various avenues to the non-genuine traders to claim fake refunds of GST, while genuine exporters' huge capital will remain stuck up with the FBR", Usman pointed out.
Usman said that though government did not impose GST on exports directly but as it brought ginners under GST regime besides unregistered suppliers and at import stage imposition of GST would massively affect the exporters resulting in blocking of their capital.
TMA chief said that under the Presidential Ordinance the upward revision of SFED (Special Federal Excise Duty), too has been increased to 2.5 per cent from one per cent, which would massively increase overheads of exporters as SFED is imposed on all banking instruments. TMA Chief also expressed worry over the one time imposition of surcharge on income tax, as it was not clearly defined in the SRO that how it would be imposed on exports.
He said that government is creating a sheer mess in the exports trade by trying to further blockage on the exporters' hard earned money in addition to the already stuck refund claims against duty drawbacks, GST, DLTL (Drawbacks on Local Taxes and Levies) to the tune of over Rs46 billion for the last three years.
Usman has demanded of the government for immediate withdrawal of SRO 231(I) 2011 and restore status quo of the original SRO 509(I) /2007 of June 9, 2007 allowing zero-rated status to five export oriented sectors.
'This amendment would create enormous problems in the entire supply chain and there are many questions arising such as sale of cotton by ginners to spinners, which would attract sales tax as ginners are not required nor are the exporters-cum-manufacturers", Usman said.-PR
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