Pakistan government is yet to clear refunds worth Rs50 billion for textile exporters under the duty drawback scheme, accumulating till October 2014. The delay in releasing the outstanding tax and duty drawback could further weaken the sector’s ability to export and also reduce their profitability.

Pakistan’s textile industry has been looking forward to a full refund of export tax rebates as early as possible.

According to the All Pakistan Textile Mills Association (Aptma) only value-added textile sector exporting units had an accumulated pending refund of about Rs30 billion during last year. Total outstanding sales tax and income tax refunds of the basic textile sector amounted to Rs5.156 billion as on November 8, 2014

The tax authorities have held payments up to 50 percent of sales tax refunds or Rs3.570 billion, while the payments against income tax are Rs1.585 billion.

Jawed Bilwani, chairman Pakistan Apparel Forum said that textiles exporters are paying two percent sales tax and 0.25 percent export development levy after the government withdrawn zero-rated regime facility for the five major export-oriented sectors.

Shabbir Ahmed, chairman Pakistan Bedwear Exporters Association also criticized the performance of Pakistan Revenue Automation Limited (PRAL) as no less than 75 percent refund cases of the bedwear exporters are deferred by this computerised system, resulting genuine exporters money in billions are blocked.

Textile industry is already on the verge of collapse due to energy crisis and high production cost, adding to that non-repayments of the refunds have forced the industry to cut their working capital.