To resolve liquidity problem of exporters, restoration of Zero Rating on Sales Tax – No Payment No Refund Regime reinstating SRO 1125 is highly indispensible. The current volume of Pakistan exports cannot unsurpassed unless the burning liquidity problem being faced by exporters is not addressed by the Government. To achieve a great milestone in enhancement and development of exports, it is crucial that the Government must facilitate the export sector and its policy should be revised from “penalize to incentivize” as the Five Export Oriented Sectors have been highly aggrieved due to rescinding SRO 1125 and imposition of 17% sales tax on exports with a view to collect sales tax on domestic sales of textiles. This unwelcomed move penalized the export sector as their precious liquidity in shape of sales tax refund was held unnecessarily with Government. Textile exporters who had timely filed their claims of sales tax refunds have received only 40% of their pending sales tax refund with the Government. However, 60% of sales tax refund are carried forward and still pending which cumulate approx. 12% to 15% amount of exporter’s running capital. This was stated by Shaheen Merchant, Chairman, Pakistan Denim Manufacturers & Exporters Association.

The textile exporters do business on a very narrow margin and they can apply for refund only after export of consignment. Hence, the financial hardships of export industries have multiplied mainly due to imposition of 17% sales tax. In the larger interest of country and to enhance exports to strengthen the economy, the Government in this Budget must restore Zero Rating on Sales Tax – No Payment No Refund Regime reinstating SRO 1125.

The global economic slowdown has also adversely affected the export sector of Pakistan. To dampen the effects of COVID19, deserving support and attention of the Government to the export oriented sectors is inevitable. The Textile exporters have already faced colossal financial losses during global lockdown which has brought damages to their businesses. Now that the global business activities have started moving towards normalization, many Buyers have changed the term of payments and demand 120 days for payment. How Export Industries will survive in these circumstances when buyers needs 120 days for payments along with 17% sales tax which is refunded after excessive delays? Hence, the financial losses to export industries are multiplying every coming day.

Shaheen Merchant demanded that in present difficult times lockdown, the Government should pay deserving considerations and accord priority to the Five Export Oriented Sectors and facilitate the export sectors and restore zero rating of sales tax “No Payment No Refund Regime” through revival of SRO 1125 in letter & spirit in the national interest.