Mushtaq Ali Cheema discussed the Rules for Delivery of Goods and Services (without payment of sales tax) Rule 2005 with emphasis on removal of difficulties of the textile industry.
The rules should be issued to facilitate the textile industry and it is necessary to examine practical difficulties of units operating in all major cities, officials quoted the minister as conveying to tax authorities.
The CBR has received the proposal of textile minister and it would be examined in the light of sales tax laws and tax facilitation regime.
The representative of business community also submitted their viewpoint on the new rules, officials maintained.
The CBR has conveyed to the minister that new procedure will be issued for exporters permitting them to purchase sales tax-free goods/raw materials from local market/imports to create refund-free environment for exporters from 2005.
No refunds would be created and subsequently exporters would not be required to claim the same, thus, resolving their liquidity problem to a great extent. This would also save the time of exporters consumed in clearance of refunds.
Tax officials pointed out that simplification of rules would free exporters from worries of liquidity created due to stuck-up refunds amount with the sales tax department.
Exporters would be entitled to buy tax-free raw materials against a letter of credit for local purchase as well as imported goods, thus, leaving a substantial amount of fund for investment and increasing exports.
The decision would also boost exports, as exporters would be having additional funds as well as sufficient time and human resource, which was earlier utilised in seeking refunds.
The issuance of new rules would create business-friendly environment for exporters, as the new procedure is to usher in an era of 'no input tax, no refund culture' in the sales tax regime, officials added.