‘Delay in refund payments eroding financial viability of textile exporters’

FAISALABAD: Pending refund claims of Rs189 billion have eroded the financial viability of textile export sector, said Senior Vice President Faisalabad Chamber of Commerce & Industry (FCCI) Zafar Iqbal Sarwar.

He said the delay is tantamount to butchering the only available “Golden Egg Laying Hen”, referring to the country’s textile sector, in addition to expected unemployment which will trigger a new wave of lawlessness amid prevailing complex and highly volatile political mess in the country, reported Business Recorder.

He said the textile industry has supported government’s drive to enhance tax collection through documentation and transparency of economy. “Textile industry is convinced to double the export from $13 billion to $25 billion in line with Prime Minister’s vision,” he said and added that facilitation is imperative to achieve this cherished goal. 

According to the media report, Sarwar pointed out three major irritants including sales tax refund, CDC bonds and payment of all other pending refunds which are hindering textile exports.

Quoting statistics, sales tax refunds, he said Rs80 billion are regular Sales Tax refund claims pertaining to July 2019 to October 2019. Another amount of Rs10 billion and yet another Rs30 billion claims are pending respectively under section 66 (Pending since 2014) and deferred since 2012. About other pending refunds, he said that among these include Rs15 billion from the head of Duty Drawback, Rs19 billion from income tax, Rs15 billion from income tax credit and Rs5 billion from the head of provincial sales tax, claimed the report.

Explaining the practical complications of sales tax refund, Zafar Iqbal Sarwar said that in the recent 2019-20 budget, the government has introduced new sales tax regime and refund filling procedures for export oriented textile industry. As a result of these measures, the exporters have paid an estimated amount of Rs 60-80 billion as input sales tax but they are unable to file refund claims due to procedural bottlenecks. “Now the industry is facing serious liquidity crises due to inability to file claims of huge stuck-up refunds,” he added.

According to the report, he said that in order to support the government in tough monetary conditions, some export oriented textile units had opted for Promissory Bond option but they are still in a quandary and waiting for any discounting mechanism whereas other units are getting cash in full settlement.