As per the Federal Board of Revenue (FBR) data as on June 30, 2017, pending liabilities in sales tax are: total pending sales tax refund claims involve Rs 44,594 million; deferred sales tax refund (claims 37,927) involving an amount of Rs 12,912 million; fresh sales tax claims (6,633) Rs 13,764 million and RPOs (claims 6,205) Rs 17,918 million. The government had committed that payment against RPOs involving payment up to Rs 1 million shall be made by July 15th, 2017, whereas the remaining shall be made by August 14, 2017. Accordingly it is expected that Rs 15,209 million sales tax refunds will be paid to the textile sector by August 14, 2017.
The FBR has paid Rs 5,411 million customs duty drawback out of total Rs 12,897 million claims, reflecting balance of Rs 7,575 million as on June 30, 2017. Sources said that the textile sector has requested to include the packing material in the zero rating regime. The matter was discussed in the inter-ministerial meeting and it was informed by FBR that textile sector agreed for its non-inclusion during the zero rating discussions. This may have financial implications of around Rs 13 billion.
The ginning sector has requested that they may be included in zero rating of utilities as this facility is available to remaining textiles value chain. The Ministry of Textile Industry opined that the matter was discussed during inter-ministerial meeting and FBR informed that ginning is placed in exempted sectors. The textile associations have requested that imported coal has not been available under zero rating which is one of the major sources of energy for Punjab based textile sector. The comments of Ministry of Textile Industry revealed that the matter was discussed during the inter-ministerial and FBR was requested to early prepare the mechanism.
Status of Prime Minister Package for textile sector revealed duty drawback of taxes has been continued; exemption of customs duty and sales tax on import of cotton till July 15, 2017; withdrawal of custom duty on manmade fibers (MMF) other than polyester contented and zero rating of textile machinery has been continued. The allocation and disbursement position till June 30, 2017 for the Duty Drawback of Taxes Scheme revealed that substantial claims will be received in coming months, approximately Rs 40 billion for claims of January 16, 2017 to June 30, 3017.
The Finance Division has allocated Rs 4 billion for the Duty Drawback of Taxes Scheme under the PM Package for FY18. In pursuance of the 6th Meeting of Federal Textile Board, the Secretary Ministry of Textile Industry held inter-ministerial meeting with the Finance Division, Federal Board of Revenue, Ministry of Water and Power and Ministry of Petroleum and Natural Resources. The Finance Division supported the proposal that Rs 4 billion may be released on priority basis. The Finance Division has allocated Rs 5 billion and disbursement and pending liabilities under the schemes.
Copyright Business Recorder, 2017