Hosiery Manufacturers Welcome Rs100 Billion Sales Tax Refunds Release

LAHORE– The Pakistan Hosiery Manufacturers & Exporters Association (PHMA) has welcomed the government decision of releasing sales tax refunds of Rs.100 billion to the industry under the government’s Rs1,240 billion package announced by the prime minister, saying the move will address the liquidity challenges faced by the exporters if it is implemented fully.

In a statement issued here on Monday, Pakistan Hosiery Manufacturers & Exporters Association vice chairman Shafiq Butt observed that that improved cash flow position of the hosiery exporters would ensure that workers get their salaries on time.

According to the reports, all tax refunds as of 31st March 2020 have now been cleared, including Rs.52 billion in GST refunds to local industry, Rs.10 billion released to the export industry through the FASTER system, and Rs.15 billion in duty drawback payments. According to the government officials about Rs.20.5 billion under the DLTL scheme have also been released.

The government claims that during the current fiscal year (July-March FY20), it has so far released Rs163 billion in tax refunds to industry (under GST and income tax), which is a 61.4 percent increase from Rs101 billion released (July-March FY19) last year.

PHMA vice chairman noted that it is the time to take unprecedented steps to support business and employment in this difficult situation, releasing tax refunds to the industry at a fast speed, as Pakistan’s export are expected to decline up to $4 billion due to spread of Covid-19 across the world.

He said that during early weeks of March 2020 exports were showing 13 percent growth but as Coronavirus spread throughout the world including Pakistan, exports started showing declining trend and in the end negative growth was over 8 percent.

He requested the provincial government to let those industries start their operations whose workers reside within the factory boundary, adding that the industrial units and plants which are in rural areas can also start their operations with taking safety measures.

Shafiq Butt maintained that a framework should be formulated to distribute the proposed Rs200 billion amongst the unemployed people of which daily-wage workers are in millions who were working in shops and small factories etc.

He said that there are industrial labour, commercial labour and other workers, who can also be supported through EOBI, workers welfare funds, workers participation funds and social security funds.

Shafiq Butt said that presently industrial production has been slowed down. In order to save the economy from the impacts of the slowdown in the world economy due to the COVID-19, the government should take economic measures to keep industrial wheels running and save the livelihood of millions, including disbursement of all outstanding sales tax refunds at a fast speed, significant cut in mark-up rate and continuation of energy supply on competitive rates.

On this occasion, the PHMA vice chairman also proposed the government to suspend sales tax collection from the exporting sector, restoring its zero rating status temporarily to avoid liquidity crunch in this time of crisis.

He urged the government to ensure continuation of electricity and gas supply to the export sector at government committed rates on long-term basis and slash the interest rate to single digit with a view to achieve export target and fully exploit the extension in GSP Plus status to Pakistan.

He said other countries are combating the situation through massive injection of funds through outright grants, ensuring availability of cheap credit to the industry and deferment of all government dues and taxes.— PRESS RELEASE