By admin       2019-01-16

The government on Tuesday ordered immediate clearance of about Rs36 billion refund claims of exporters and allowed tax and duty-free import of cotton in addition to mandating the payment of duties and taxes on import of vehicles in foreign exchange.The decisions were taken at a meeting of the Economic Coordination Committee (ECC) of the Cabinet presided over by Finance Minister Asad Umar.In response to demands of the textile industry, the ECC approved withdrawal of customs duty, additional customs duty and sales tax on import of cotton effective Feb 1-June 30, 2019.The step is aimed at ensuring sufficient cotton supply for textile industry – especially its export segment.The decision was based on the plea that Pakistan had been a net cotton importer since 2001 while the domestic cotton was of short-to-medium staple length, leaving local textile manufacturers to import long and extra long staple cotton for finer yarn counts for subsequent transformation into high value-added finished products.Import of cotton has remained duty free till the slab of 0pc was abolished in 2014-15 and custom duty of 1 per cent was imposed along with the 5pc sales tax. Later on, 1pc slab was increased to 2pc and then 3pc along with the imposition of 2pc additional duty to make it 5pc. Currently, cotton is subject to 3pc customs duty, 2pc additional customs duty and 5pc sales tax.The prime minister’s export package was announced in Jan 2017 under which the textile sector was provided number of facilitations including withdrawal of custom duty and sales tax on imported cotton effective Jan 16, 2017.These duties and taxes were re-imposed on July 15, 2017 to facilitate lifting of local cotton. However, these were withdrawn again effective Jan 15, 2018 and then re-imposed effective July 15, 2018.The textile ministry had once again demanded withdrawal of these taxes and duties now saying the industry consumed around 12-15 million bales per annum while local crop this year was estimated at 10.78m bales of 170kg, showing a decrease of 9.7pc compared to last year and a decrease of 24pc against the initially fixed target of 14.37m bales.

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