The All Pakistan Textile Mills Association (APTMA) on Monday urged the Federal Board of Revenue (FBR) to adjust super tax liabilities against long-pending sales tax, income tax and other refund claims, warning that immediate recovery could severely disrupt the already cash-strapped textile sector.
In a press statement, and an overall weak business environment, making it difficult for manufacturers to pay super tax in a single tranche.
He cautioned that one-time recovery of super tax would not only disturb day-to-day business operations but could also have broader repercussions for the national economy.
“The industry is grappling with high energy costs, double-digit interest rates, excessive taxation and rising imports of raw material and intermediate inputs, which are displacing domestic upstream segments,” he said.
Arshad added that the immediate demand for super tax amounting to hundreds of billions of rupees would drain working capital, disrupt cash flows and make it difficult for businesses to meet routine obligations such as salaries, utility bills and other financial commitments.
The APTMA chairman urged the FBR to allow adjustment of super tax liabilities against pending income tax, sales tax and other refund claims, including Technology Upgradation Fund (TUF) and Duty and Tax Remission for Exports (DLTL).
He further proposed that any remaining liability should be converted into “easy, business-friendly instalments”.
Highlighting technical concerns, Arshad said the computation of super tax under Section 4C for exporters should be based on imputable income, as exporters remained under the Final Tax Regime (FTR) up to tax year 2024.
He stressed that imputable income should be calculated by reverse computation of income corresponding to tax already paid under FTR to arrive at an equivalent liability under the Normal Tax Regime.
Given the widespread implications for the export-oriented textile sector, he said the FBR should engage with APTMA and other stakeholders to develop a generic clarification on the application of Section 4C, in order to avoid inconsistent interpretations.
Arshad also called for immediate suspension of recovery proceedings until these issues are resolved, warning that failure to provide relief could lead to large-scale closures of textile units, including SMEs, resulting in job losses and reduced foreign exchange earnings.
He cautioned that such an outcome would shrink the tax base instead of expanding it and further weaken the economy.