PTC submits budget proposals to PM

ISLAMABAD: The Pakistan Textile Council (PTC) has submitted its proposals to the Prime Minister for federal budget 2025-26 meant to enhance export competitiveness, stimulate economic growth, reduce IMF dependency, empower women and support SMEs.

The proposals submitted to Finance Minister and FBR are as follows: (i) reintroduction of Regionally Competitive Energy Tariff (RCET) for gas and electricity. Freeze tariff for 3 years; (ii) remove cross-subsidies; (iii) abolish 0.25% EDF surcharge on export proceeds; (iv) reduce compliances, unify regulators (e.g., KPT, shipping agents), and establish new industrial zones with one-window operations; (v) for better utilization of funds from statutory contributions, EOBI, Social Security, Labour Department, Worker welfare fund may be merged as one window operation. Rate of contribution to these institutions may be revised and decreased; (v) as the inflation is low, any minimum wage increase should not be more than 5%. Concept of Min-wage may be revised as “fair wage” defined as 60% basic pay plus allowances;(vi) over time limit may be revised with more flexible hours as four hours in a day without weekly limits. Rate of Overtime may be revised at 1.5 of ordinary rate of basic pay (60%) per hour; (vii) Final Tax Regime (FTR) may be reintroduced for exporters;(viii) advance Tax, should be abolished otherwise it should be based on the Tax assessed for previous year as is applicable to other corporate sectors;(viii) withdrawal of Super Tax on high earners;(ix) enhancing the limit for salary payable in cash to Rs 70,000/; (ix) restore initial depreciation allowance on plants and machinery to 50% and 25% for building;(x) investment tax credit - exporters be allowed to get refund of their tax credits if any amount of credit is unutilized; (xi) Minimum Tax be phased out for listed companies;(xii) Pakistan’s corporate tax rate (29%) is above regional average and may be gradually reduced to 20%, prioritizing listed firms;(xiii) no fiscal incentives exist to support green or SDG-compliant investment. Targeted reliefs and incentives to be introduced; (xiv) reduction in Further Tax under section 3 (IA);(xv) extension in time Period for Input Tax Adjustment to 12 months as delayed receipt of invoices etc.;(xvi) joint liability of Registered persons in supply chain may be removed; (xvii) exemption of Listed Companies from Section 8B;(xviii) expediting process of sales tax refunds. For overruling of the sales tax deferred refunds, the required document must be highlighted in the system which can be traced from FBR system or attach scanned copies in the system to process the refunds at earliest; (xv) clear all pending refund claims to ease liquidity crisis of exporters to fully utilized potential of increasing textile exports by $ 3-4 billion per annum; (xvi) registration and Deregistration U/s 14 be expedited and be done within a week from date of filing of application; (xvii) revision of Sales Tax Return - IRIS system may be modified in accordance with the sub sections (3) and (4) to Section 26 of the Sales Tax Act, 1990 to allow registered persons to file revised return along with tax and surcharge without seeking prior approval of the commissioner; (xviii) curtailing discretionary powers of tax officers: section 37 and section 38 may be suitably amended and prior approval of the Board be required before initiating proceedings against registered persons who are on the Active Tax Payers List; (xix) Section 37A of Sales Tax Act 1990 be amended in line with Supreme Court of Pakistan’s judgement dated 4-12-2024 in case No 17653/24 which says that the power to arrest and prosecute is part of criminal proceedings and cannot be done till determination of civil liability;(xx) accessing of accounts & records should be limited to once a year as per Section 25, and audit should be conducted after scope, guidelines and mechanism of audit are provided for in Law;(xxi) 40B and 40C may be eliminated to minimize chances of corruption and direct contact between taxpayer and tax collector or only be done after completion of due process of law, including issuance of show cause notice; (xxii) restore EFS to its pre-Finance Act 2024 form, including the sales tax exemption/zero-rating on all local supplies used for export manufacturing;(xxiii) abolish 5% withholding tax on purchases by export companies; (xxiv) expand the existing 25% tax reduction policy (currently for 100% women-owned businesses) to businesses where women own less than 50% and 25% of the workforce are women; (xxiv) withdrawal of Custom Duty on industrial spare parts; (xxv) net value of product: It is proposed that custom duty may be charged at net transactional value of product. Cost of insurance, freight, port handling charges etc. may not be included in value;(xxvi) reduce dwell time at customs stations; (xxvii) use FOB for Tax purposes-Reduce input costs; (xxviii) restore Duty Drawback of Taxes (DDT) & DLTL as per Textile Policy 2020–2025; include in new 2025–2030 policy. Provide funds in the budget to clear all outstanding claims; (xxix) allocation for Export Finance Scheme (EFS) and Long-Term Financing Facility (LTFF) be enhanced and building infrastructure also be included in LTFF; (xxx) allocation for Trade/ Export Credit Insurance be enhanced and services be provided at low premium by EXIM bank along with credit against shipped goods. Strengthening EXIM Bank and funds be allocated to it to offer capital finance at 4–5% for 5–10 years, with SME-specific allocations; (xxxi) allow back-to-back Letters of Credit (LCs) for exporters; enhance SBP oversight on commercial banks; (xxxii) extend Technology Upgradation Fund (TUF) scheme till 2025 and release pending claims from 2009; and (xxxiii) interest free loans for green / sustainable technology, wastewater plants, and effluent treatment plants/machinery be provided.

Copyright Business Recorder, 2025