In a joint statement issued by Muhammad Jawed Bilwani, Chairman Pakistan Apparel Forum, Aslam Karsaz Chairman (SZ) Pakistan Hosiery Manufacturers & Exporters Association, Shaikh Safiq Chief Coordinator Pakistan Readymade Garment Manufacturers & Exporter Association, Kamran Chandna Chairman Pakistan Knitwear and Sweater Exporters Association, Khawaja M Usman Chairman Pakistan Cotton Fashion Apparels Manufacturers & Exporters Association has said that government is completely failed to meet it commitment on refund payments.
It was agreed that sales tax refund claims payments will be made immediately after submission of GD like Bangladesh Model and in case the government fails to make swift payment to exporters and unsuccessful in the implementation of new refund system in three months, the government will restore the zero rating of sales tax and no payment no refund regime for the five export sectors, they said.
"The government's basic purpose to abolish zero rating is to collect sales tax on local sales of textile. We don't know how much amount they collected from the local sales of textiles but approximately Rs90 billion of rupees of textile exporters are held up in sales tax in July-Sep 2019", they mentioned.
They said that FBR also gave assurances to exporters the new refund system will be user-friendly and refund will be processed without human involvement. In this regard, government introduced FASTER refund system for five export sectors by which sales tax refunds for exporters to be paid within 72 hours. However, this system is very cumbersome and complicated process, which even the chartered accountant cannot submit in a first sight and in one go, exporters said.
They said that FASTER system is still under-process and not completed yet. Further, it is also an irony after introduction of new refund system, FBR has not hold awareness session to facilitate the exporters that how to submit Annexure H.
"We have learnt after filing sales tax refund only 110 exporters out of 25,640 total exporters were able to file Annexure H, out of which only 44 claims approved for refund amount to Rs 236 million", Javed Bilwani chairman PAF said.
He informed that from July to Sep 2019 exports were worth Rs892 billion approximately which includes sales tax amount of 17 percent deducted on raw material, packing material and utilities while 17 percent of sales tax on imported besides including 3 percent additional sales tax.
"As per our rough estimation on basis of export figures of Jul-Sep 2019, an amount of Rs151 billion of 17 percent sales tax claims is lying pending with the FBR. But, FBR has approved refunds of only Rs236 million out of Rs151 billion which is only 0.15 percent", Bilwani said.
Exporter have urged the government failed to fulfill its commitment to pay refund within 72 hours after completion of three months, to save the export industry from complete ruin and disaster.
In addition in the larger interest of exports, the government should consult the genuine stakeholders for improvement and initially the Sales Tax at a humble percentage should be imposed, they said and added that sales tax percentage may be increased gradually for the five export sectors, if government will be able to pay refund within specified time successfully.