Daily Times

The textile exporters are facing the liquidity crunch due to undue delay in billions of rupees sales tax refunds and the situation is hampering their business activities.

Pakistan Textile Exporters Association Khurram Mukhtar, patron, Khurram Mukhtar said the crunch is adversely impacting the export cycle as exporters’ liquidity have already taken a strong negative hit from adverse impacts of global recession.

Mr Mukhtar said textile export industry has entered into a sustainable economic growth phase, however, emergence of an economic crisis would be an instant setback, coupled with rising manufacturing expenses, squeezed financial assistance, escalating prices and shortage of raw material are among various factors which may hit the growing trend.

Expressing serious concerns over unnecessary delay in payment of exporters’ sales tax refunds, he urged the government must take immediate measures to ease off the financial stress and gear up the export growth.

He said that textile industry comprising 46 percent of the total manufacturing sector, provides employment to around 15 million Pakistanis, and contributes 8.5 percent to the GDP, is the industry that can lead the economy out of crisis.

Appreciating the announcement for payment of RPOs issued till Oct 2, he said timely payment of sales tax refunds is still a major issue. Despite all the commitments, FBR had failed to pay the sales tax refunds of zero rated sectors within 72 hours. Outstanding sales tax refunds volume has crossed billions and exporters are facing severe financial hardship leading to a disruption in export production, he said.

The PTEA Patron claimed textile exporters are stranded in the middle of nowhere and cannot decide about the future of their businesses in a scenario when the global business is facing a slowdown.

Referring the Rule 39-F of the Sales Tax Act 2006, he said sales tax refund claims for which approved ERPOs are issued, would be paid within 72 hours but funds have been stopped for more than a month. Textile industry is already under pressure in the current uncertain times, where export orders are dwindling due to the global recession, he added.

He emphasized that sales tax refunds should be cleared immediately because further delay would dent the liquidity of textile exporters, which would disturb the flow of working capital.