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Further tax exemption on yarn extended

KARACHI (March 07 2004): The Central Board of Revenue (CBR) has extended exemption for payment of three percent further tax on sale of yarn by the textile mills to the unregistered persons till June 30.

The exemption, on payment of additional tax granted under SRO 998 of October 2003, expired on February 29, but on a representation from All Pakistan Textile Mills Association (Aptma), the CBR agreed to extend the concession till June 30.

The exemption from payment of further tax had been granted on the plea made by the textile mills that most of the weavers in the country, who bought spun yarn, were not registered and hence the textile mills had to face extra cost in selling the commodity in the weaving market.

They pleaded that unless all the weavers were not registered, the textile mills should be exempted from payment of additional tax at the rate of three percent.

The decision will come into effect after a new SRO is issued after amendment to the existing SRO 998.

The concession has been granted only on the sale of spun yarn produced by the textile mills.

The manufacturers of filament yarn do not enjoy the exemption from payment of further tax at the rate of three percent on sale of yarn to the unregistered persons.

Former Chairman of Pakistan Yarn Merchants Association (PYMA) Ashraf Sattar has welcomed the CBR decision, and said that the same concession should be allowed to the manufacturers of filament yarn.

He said that his association had also requested the CBR for exemption of further tax on the sale of filament yarn, but the request was not accepted till date. The request was based on the plea that most of the buyers of filament yarn were not registered.

He said that the CBR's double standard in dealing with different type of yarn had created distortion in the market and had resulted in reduced sale of the filament yarn.

Ashraf urged the CBR Chairman to use the same yardstick in dealing with two or more types of yarn.

It may be pointed out that the value-added textile sector is demanding restriction in the form of export duty on yarn to ensure availability of yarn to the value-added textile sector at a reasonable price.

The Chairman, Export Promotion Bureau (EPB), has convened a meeting of the textile sector on March 9 to discuss the issue.

Pakistan Readymade Garments Manufacturers and Exporters Association (Prgmea) Chairman Tahir Aziz said on Saturday that he was not in favour of any restriction on any textile sector, but he only wanted that the garment exporters should be provided yarn at a reasonable price so as to make them competitive in the export market.

He said that the country earned only 1.95 dollar from export of one kilogram of yarn as against 10 dollars from export of one kilogram of garments.

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