Pakistan Cotton Ginners Association (PCGA) in a recent press conference addressed the newly imposed 4pc with holding tax on the entire textile value chain.
PCGA warned that this imposition of tax would completely destroy the industry.
Mr Mehr Muhammad Ashraf Mahar, PCGA Vice Chairman, Haji Muhammad Akram (Former Chairman) and Mr Asim Aseed Sheikh (Ex Vice Chairman) during the address stated that the tax on domestic commerce was 1pc instead of 4pc as there was no change in the income tax laws, rules and regulations but now a ‘clarification’ by FBR was issued stating that the withholding tax on the entire textile value chain would be 4pc.
They further added, “This measure is example of extreme shortsightedness as 4pc of the gross value of each invoice as advance income tax cannot be recovered and will necessarily become part of the cost.
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Quoting an example while looking at the cotton purchase from the ginners, a 4pc deduction from the ginners invoices will lead to pressure on ginners to reduce the price they pay for cotton procured from the farmer as their own tax liability in reality is only for ginning charges which constitutes 35pc of the ginned cotton.
