KARACHI (February 10 2003) : The Pakistan Readymade Garments Manufacturers and Exporters Association (Prgmea) has urged the Central Board of Revenue to continue allowing temporary imports to exporters under SRO 410 for at least a year along with the Duty and Tax Reemission Rules for Exports.
Zubair Parekh, Chairman, Prgmea, Southern Region, in a statement expressed concern over reports that the CBR intends to withdraw SRO 410 despite the fact that Commerce Minister Humayun Akhtar had assured its continuity to exporters.
He said that the CBR has not removed the lacunas pointed out to the Member, Exports, Mumtaz Haider Rizvi, by Prgmea members in a seminar organised by the association.
The main objection on the DTRE was non-refund of duty paid by the exporters on purchase of imported raw material from the local market.
The non-refund of duty on purchases would increase the export cost by two percent, which would erode the competitiveness of garments in an already highly depressed market.
The second objection on the DTRE rules by the exporters is that they are bound to make purchases from a sales tax registered person. This condition is very difficult for exporters as majority of small suppliers of buttons and thread are still not registered with the ST Collectorate.
The Prgmea chief further said that under the rules the supplier is permitted to claim input adjustment for selling sales tax-free goods to the exporter.
However, it is clear that no supplier would like to take the hassle of claiming refund or input adjustment from the Collectorate.
According to an observation made by the Sales Tax Collectorates 80 percent of the taxpayers prefer to file a nil return.
Zubair emphasised that as a result of these lacunas not a single garment exporter is registered under DTRE.
He said that when all the objections on the DTRE rules are removed the exporters would automatically adopt the system, which the CBR thinks is more comfortable and simple for them.