20000104

PCMA resents

ST payment

through cheque

RECORDER REPORT

KARACHI: The Pakistan Cloth Merchants Association (PCMA) has urged the Ministry of Finance to exempt textile exporters from the Sales Tax order which makes payment by cross-cheque mandatory of any amount exceeding Rs. 50,000.

Iqbal Mangrani, Chairman PCMA said in a statement that the new payment system was not practical in textile manufacturing which comprises several stages. The exporters generally give this work to sub contractors and brokers who make purchases of yarn and convert the same through weaving, dyeing and printing into the finished products required by the exporters.

He further said that this saved a lot of time for exporters who concentrated on marketing. The brokers and middle-men do this work on credit and receive payment from the exporters even after the manufactured stuff has been exported and export proceeds realised. Since these brokers are not registered they do not issue any invoice. They, however, get invoice in the name of exporters from the mills from which they purchase yarn.

Mangrani said that the new system of payment would deprive exporters from the credit facility extended by the middle-men and their liquidity position which is already bad due to delay in sales tax refund and customs rebate, would become worse.

He said that new scheme of payment could not work due to the large-scale unorganised sector in textile industry. It is estimated that the industry comprises 60 percent unorganised sector mainly in textile processing such as weaving, dyeing and processing.

Mangrani appealed to the Finance Minister to exempt textile exporters from the rule as it would severely hurt textile exports which were already greatly depressed.