Purview of Export Facilitation Scheme: FBR notifies exclusion of cotton yarn, grey cloth and raw cotton

ISLAMABAD: The Federal Board of Revenue (FBR) has notified the exclusion of cotton yarn, grey cloth and raw cotton from the purview of the Export Facilitation Scheme (EFS).

However, iron and steel scrap would remain under the scope of the EFS.

The FBR has amended Customs Rules through issuance of SRO.1435 (I)/2025 here on Tuesday. The draft SRO.1359 (I)/2025 was issued on July 29, 2025. The final notification has now been issued to notify the revised EFS.

Under the SRO.1435 (I)/2025, these three items have been excluded from zero-rating facility under the EFS scheme and therefore cotton yarn, grey cloth and raw cotton now chargeable under standard rate regime of sales tax.

The revised scheme said that the import of compressor scrap and motor scrap shall be allowed for copper content only. The raw cotton, cotton yarn and grey cloth falling under the respective headings of Pakistan Customs Tariff shall be excluded from the scope of EFS. Provided that import consignments of raw cotton, cotton yarn and grey cloth with bills of lading issued within ten days of the issuance of this notification shall he allowed under this scheme.

According to the SRO.1435(I)/2025, under the revised EFS, the “insurance guarantee” means a guarantee issued by an insurance company duly notified by the Board, having Pakistan Credit Rating Agency rating of AA++, on such format and conditions as prescribed by the Board.

“Till the notification of the format of insurance guarantee by the Board, the EFS users shall be required to submit bank guarantee, wherever applicable”, it said.

Provided that EFS users shall be allowed to acquire new raw' materials to the extent of 10% of total authorization without requiring prior approval from the Regulatory Collector or input output coefficient organization.

The copper content for motor scrap shall be allowed on value of ten percent by weight and for compressor scrap eight percent by weight. Customs duties, sales tax and withholding tax shall be applicable at import stage on balance steel scrap component which shall only be sold to sales tax registered melters, the revised scheme said.

In exceptional cases, a committee comprising of senior officers from FBR, Ministry of Commerce and Ministry of Industries and Production may grant further extension in utilization period up to nine more months for reasons to be recorded, the revised EFS added.

Copyright Business Recorder, 2025