KARACHI: The government, vide Finance Act FY 19-20, has amended the definition of cottage industry and now industries having an annual turnover of Rs3.0 million will be considered cottage industry as opposed to Rs2.0 million threshold proposed by the Finance Bill.
It may be mentioned here to qualify as cottage industry; the maximum threshold of annual turnover had been proposed to be decreased from Rs.10 million to Rs.2 million with imposing certain other conditions.
Senior Vice President Federation of Pakistan Chambers of Commerce and Industry (FPCCI) Mirza Ikhtiyar Baig said government had agreed with the business community to increase the threshold to Rs5.0 million, however it was only increased to Rs3.0 million.
“Given the depreciating rupee and rising interest rates, Rs3.0 million annual turnover is too low. We had proposed to increase it beyond Rs10 million,” Baig said adding this development would adversely impact the genuine cottage industry as they would be deprived of certain benefits and exemptions available for such industry.
He however admitted that certain large scale industries had got them registered as cottage industry to take undue benefit of the concessions and lower interest rates.
It may be mentioned here that State Bank of Pakistan (SBP) has separate prudential regulations for cottage industry, and such industrial units can avail financing at lower rates and against cash-flows, which means they do not have to provide collateral against financing.