960414

KCA warns CBR

Sales Tax levy

on ginned cotton

to affect export

and production

RECORDER REPORT

KARACHI: Chairman Karachi Cotton Association (KCA) Maqbool Sadiq has warned that imposition of Sales Tax on ginned cotton will have serious repercussions on production and exports of cotton and textiles.

In a communication with the member (Sales Tax) Central Board of Revenue (CBR) Riaz Malik, KCA chairman said if 15 percent sales tax is levied on ginned cotton it will result in depressing prices of ginned cotton by Rs 337 per maund and of phutti by Rs 112 per maund.

He felt, it will reverse the rising trend in cotton production thereby creating serious problems for the textile mills and exporters in meeting their requirement of cotton for mills and exports and erode foreign exchange earnings for the country.

The sales tax, he said, will prove to be discouraging and disinvestive to the growers in coming years.

However, he suggested if such a mechanism cannot be evolved, and if 15 percent sales tax is levied on ginned cotton for export, then the same should be refunded immediately to the exporters after shipment at the time of negotiation of documents/realisation of export proceeds.