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Pakissan.com;
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Budget raises new issues for textile sector
ANWAR KHAN
KARACHI (June 15 2007): The export-oriented textile sector has termed the federal budget 2007-08 unfavourable, as it rises to new issues, as a result cost of production will further surge up, industry sources said on Thursday.
They said the industry was already faced with severe problems in the absence of government support and was on the constant decline in terms of exports, the new budget announcement would further bring it on the rocks.
They pointed out several issues announced in federal budget 2007-08 including extension in refund processing time from 30 days to 45 days, reducing scope of ADRC, inadmissibility of input tax on electricity use in labour colony, extension of sales tax maintenance from 3 years to 5 years.
Furthermore, over regulation by providing unprecedented powers to central board of revenue (CBR), who may acquire any taxpayer to deal with any specific account, restriction of refund payment against zero-rated supplies to unregistered person etc, they added.
"Instead, giving support to the textile industry, government has put further burden on it, which is feared to cause severe problems to the entire industry," said Saleem Parekh, Chairman Pakistan Hosiery Manufacturing Association (PHMA). He said that earlier the sales tax refund processing time was 30 days, during which such returns took more than a year, how it could be possible that refunds would be processed in 45 days. Such delays are frequent being born by the textile industry, and 45 days processing time would not help the industry anymore, he maintained.
"Discretionary powers of sale tax officers are also reduced, earlier they had the authority to receive sales refund claims in 90 days using discretionary powers instead of 60 days," he added.
He said that about Rs 400 million refund claims of the knitwear sector were still in pending for more than a year CBR, leaving the industrialists in financial crisis, which also brings about increasing cost of production.
He said that sales tax record maintenance for five years extended from three years as an another problem emerged in the budge announcement, adding that such move would put a negative impact on the industry.
Government had announced making five major export oriented industry zero-rated by lifting sales tax on textile, including leather, carpet, sports goods and surgical industries, on the contrary, it has imposed sales tax on electricity supply to labour colonies of industries, he added.
Pertaining to CBR bank accounts arbitrary selection for the payment of refund claims, Chairman PHMA said that it should be the client choice that which account he would like to offer to CBR for payment. He said that CBR should not impose such arbitrary decision on clients.
About, restriction by CBR on industries regarding business transaction with non-registered organisation, he said that according to new rule now CBR would not allow refund claims, which would further push the industry toward crisis.
Saleem said that CBR had raised sales tax on over 70 items including paper, steel, plastic and such other raw material bringing about the price hike of all such commodities in the local market. It will boost cost of business which is already on the rise, he added. He concluded that federal budget had bought nothing favourable for the textile industry.
Courtesy Business Recorder |
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