The Federal Board of Revenue (FBR) has observed that it is too early to forecast the full impact of textile package on exports as announced by Prime Minister for textile sector in January 2017. According to the brief submitted by the FBR to the Senate Standing Committee on Textile here on Wednesday, since the textile package was announced in January 2017, it may be too early to forecast its full impact on the textile industry, particularly with regards to exports.

However, it will certainly improve the comparative competitiveness of Pakistan's struggling textile industry viz-a-viz its regional competitors like India, China, Turkey and Bangladesh. The concession has been made available till 30th June, 2018 unless revoked earlier and total impact of concession in terms of customs duty and sales tax has been estimated by the Finance Division at Rs 17 billion. However, it will certainly improve the comparative competitiveness of Pakistan's textile industry.

The FBR said that the Economic Co-ordination Committee of the Cabinet considered the summary dated January 10, 2017 submitted by the Finance Division regarding "Prime Minister's Package of Incentive for Exporters" and approved the proposal contained in para-3 of the summary which included withdrawal of customs duty and sales tax on import of cotton and grant of zero-rating on import of textile machinery. In pursuance of the package, sales tax notification SRO 36(1)/2017 has been issued granting zero-rating of sales tax on import of cotton which was otherwise chargeable to sales tax at reduced rate of 5%. Moreover, sales tax-zero-rating on import of textile machinery has also been granted which, otherwise, was chargeable to sales tax at reduced rate of 10%.

Also, the whole of customs duties were exempted by the federal government on the import of raw cotton and manmade fibres (other than polyesters) vide SRO 38(l)/2017 and SRO 39(l)/2017 dated 23.01.2017 on the specified PCT codes, the FBR added.

Copyright Business Recorder, 2017