The export incentive package announced by Prime Minister Nawaz Sharif constitutes a revenue imp-act of around Rs 100 billion on government. The package covers duty drawback rates of local taxes and abolition of sales tax on import of machinery, customs duty/sales tax on import of raw cotton and duty on man-made fibre. Sources told Business Recorder here on Wednesday that the drawback of local taxes and levies (DLTL) scheme has been notified by the Ministry of Textile Industry.

The revenue impact of the enhanced duty drawback rates has been worked out at Rs 90 billion for an 18-month period. Duty drawback rates for garments would be 7% (revenue impact Rs 38 billion); textile made ups 6% (Rs 28 billion); processed fabric 5% (Rs 9 billion); yarn and grey fabric 4% (Rs 13 billion).

The revenue impact of enhanced duty drawback rates on other category of items exported is estimated at Rs 2 billion. The impact of abolition of customs duty/sales tax on import of raw cotton (at present the rate if 5 percent) and withdrawal of customs duty on man-made fibres and sales tax on import of textile machinery (at present 10 percent) has been calculated within the range of Rs 8-10 billion.

The government had announced trade enhancement initiatives of Rs 180 billion for 18 months starting from January 1, 2017 to June 30, 2018. Under the package, only if exporters show a 10 percent increase in exports after the first six months would they remain eligible for the full amount of the duty drawback.

Copyright Business Recorder, 2017