PYMA rejected 4pc withholding tax on textile value chain

Karachi, August 27, 2019: Muhammad Saqib Goodluck Chairman, Pakistan Yarn Merchants Association (Sind & Baluchistan Zone) has strongly protested over imposition of 4 percent Withholding Tax instead of 1 percent requested to withdraw recent clarification of FBR.

He said that during different meetings with FBR, imposition of 1 percent withholding Tax was agreed over Textile Value Chain (Doubling, Twisting, Knitting, and Weaving) but clarification from FBR says imposition of 4 percent withholding Tax instead of 1 percent on whole Textile Chain, is not acceptable at any cost.

M. Saqib Goodluck in his letter to Chairman FBR, Shabbar Zaidi has clearly refused to accept imposition of 4 percent W/H Tax instead of 1 percent & declared this step of FBR as highly disastrous said that on total amount of every receipt, 4 percent advance Income Tax could not collected which will increase the cost.

On purchase of cotton from Ginners, deduction of 4 percent from invoice will increase pressure on Ginners to reduce cost of cotton. In Fact, they must be responsible for Ginning Charges which is 35 percent of Ginned Cotton. Similarly, from Manufacturing of Yarn up to Manufacturing of Cloth, imposition of Every Tax will develop Highly Negative impacts on cost & Local Raw Material.

He further said that local Manufacturers Spinning units & Commercial Importers of Yarn Works at low margins but large volume, when it reach up to retails stage with reference to Polyester chain, it comprises four to five stages. If upon fourth or Fifth stage, 4 percent Tax deducted, then cost of Raw Material will increase & ultimately W/H Tax will increase from Total Margin & cases of Income Tax.

Refund will increase, which takes a long time to receive. It will be more difficult than GST because deduction of W/H Tax on input carries no subsidy. A large number of production units are engaged in Exports as well as Sales in Local Market.

FBR while Examining Audited Balance sheets of public listed companies & other companies that withholding Tax received over lesser Margin is how much excessive. Therefore, for the survival of whole Textile Value Chain 1 percent W/H Tax MUST be implemented.

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