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Business Recorder
17 hours ago
- Business
- Business Recorder
Yarn, grey cloth, raw cotton removed from EFS purview
ISLAMABAD: The Federal Board of Revenue (FBR) has excluded cotton yarn, grey cloth and raw cotton from the purview of the Export Facilitation Scheme (EFS) and would now be charged at the standard rate of 18 percent sales tax at the import stage. Under SRO.1359(I)/2025 issued by the FBR on Tuesday, these three items have been excluded from zero-rating facility under the EFS scheme and therefore cotton yarn, grey cloth and raw cotton now chargeable under standard rate regime of sales tax. The FBR has issued an SRO 1359(I)/2025 to propose amendments in the Export Facilitation Scheme on Tuesday. Details revealed that there was a major issue pending between the spinning mills and exporters since last one year. Last year, local supply of 'yarn' was excluded from the EFS facility and sales tax was imposed on local supply of yarn. They argued that the imported yarn was subjected to exemption, but no exemption on local supplies. ST, duty exemptions on imported cotton, yarn being withdrawn, Aurangzeb tells NA Resultantly, people switched to imported Yarn which disturbed the working and business of local spinning mills. Local sales of 'Yarn' were also affected due to switching over to imported 'Yarn'. Now, after chargeability of 18 percent sales tax on the import of yarn, grey cloth and raw cotton, the importers would be required to seek sales tax refunds. There is confusion in the new SRO that whether 'micro fabrics' is subjected to sales tax or not under the revised EFS scheme, sales tax expert added. According to the SRO.1359(I)/2025, under the revised EFS, the 'insurance guarantee' means a guarantee issued by an insurance company duly notified by the Board, having Pakistan Credit Rating Agency rating of AA++, on such format and conditions as prescribed by the Board. The revised scheme said that the import of compressor scrap and motor scrap shall be allowed for copper content only. The raw cotton, cotton yarn and grey cloth falling under the respective headings of Pakistan Customs Tariff shall be excluded from the scope of EFS. Provided that import consignments of raw cotton, cotton yarn and grey cloth with bills of lading issued within ten days of the issuance of this notification shall he allowed under this scheme. 'Till the notification of the format of insurance guarantee by the Board, the EFS users shall be required to submit bank guarantee, wherever applicable', SRO 1359(I)/2025 said. Copyright Business Recorder, 2025
Business Recorder
2 days ago
- Business
- Business Recorder
FASTER system: FBR eases cap for deferred ST refunds
ISLAMABAD: The Federal Board of Revenue (FBR) has relaxed upper capping limit up to 10 percent of the export value for processing of deferred sales tax refunds of exporters (excluding five export orientated sectors) under the 'FASTER' system. In this regard, the FBR has issued instructions to the field formations on processing of deferred refunds under the 'FASTER' system. Under the new instructions, the FBR has relaxed refund processing limit of exporters other than five export sectors upto 10 percent. FASTER-based: Refund processing limit be raised to 12pc, PBC urges FBR According to the FBR's instructions, in pursuance of SRO 1507(I)/2024, the Board vide CRE-35 has determined lower capping for processing of refunds of exporters (other than five export-oriented sectors) at the rate of 2 percent, 3 percent, 4 percent and 8 percent of export value for processing through FASTER on the basis of their finished products. Further, for processing of deferred Sales Tax refunds of Exporters (other than five export-oriented sectors) the Board has decided to fix upper capping up to 10% of export value (including the lower capping) or the amount of valid input tax actually consumed in exports, whichever is lower as uniform policy. Copyright Business Recorder, 2025
Business Recorder
3 days ago
- Business
- Business Recorder
Weekly Cotton Review: Price plunge hits linked sectors
KARACHI: In recent days, a significant drop in cotton prices has been observed, impacting sectors associated with the commodity. Due to reduced supply of phutti in the market, several ginning factories are operating partially, raising concerns among industry circles. The price of cotton has decreased by PKR 300 to 400 per maund, while phutti rates have also fallen. Recently, a delegation from the All Pakistan Textile Mills Association (APTMA) met with Chief of Army Staff (COAS) Field Marshal Syed Asim Munir, briefing him on the challenges faced by the textile industry. On this occasion, industry representatives discussed key issues with the authorities. Meanwhile, the Pakistan Business Forum (PBF) has urged the Federal Board of Revenue (FBR) to immediately issue a statutory regulatory order (SRO) to impose an 18% General Sales Tax (GST) on imported cotton. They argue that this measure will protect the local cotton industry. In another significant development, questions have been raised about the cotton production data released by the Crop Reporting Center Punjab. Ahsan ul Haq, Chairman of the Ginners Forum, revealed that these figures are contrary to reality, misleading farmers and industrialists. Additionally, agricultural experts have advised farmers to take precautionary measures to protect cotton crops from monsoon rains. Head Transfer of Technology Central Cotton Research Institute Multan Sajid Mahmood emphasized that farmers must follow expert guidelines to ensure the safety of their crops. The local cotton market experienced sluggish trading activity last week due to low interest from textile mills in purchasing cotton. Prices saw a decline of PKR 300 to 400 per maund. Meanwhile, intermittent rains in several cotton-producing regions of Sindh and Punjab have disrupted the ginning process, leading to a shortage of phutti. As a result, many ginning factories have shut down, while others are operating partially. Some ginning factories still hold old stock of cotton, which is being traded at PKR 15,500 to 15,700 per maund. Factory owners have faced significant losses due to the current market conditions. A prominent ginner from Rahim Yar Khan, who owns seven ginning factories, revealed that he had been operating five units but suffered heavy losses. He stated that fewer ginning factories in Rahim Yar Khan would remain operational this year. In recent days, some ginning factories in the area sold old cotton stock at PKR 15,500 to 15,700 per maund, incurring substantial losses. Industry sources suggest that some factory owners are also to blame for not selling their stock at the right time. Despite these challenges, market observers believe that this year's cotton production is likely to remain similar to last year's output. This year, textile mills have shown significant interest in importing cotton and have already secured contracts for approximately one million bales. The textile sector is currently awaiting the official notification regarding the imposition of an 18% sales tax on cotton imports, as the federal budget for 2025-26 proposed the discontinuation of the Export Facilitation Scheme (EFS) facility. However, the formal notification for this fiscal year has not yet been issued. In Sindh, the price of cotton per maund is in between PKR 16,000 to PKR 16,300, while Phutti is being traded at PKR 6,600 to PKR 7,000 per 40 kg. In Punjab, cotton prices stand at PKR 16,200 to PKR 16,500 per maund, while the rate of Phutti is in between PKR 6,500 to PKR 7,200 per 40 kg. Meanwhile, in Balochistan, cotton is priced at PKR 16,100 to PKR 16,300 per maund, Phutti is being sold at PKR 6,600 to PKR 7,200 per 40 kg. The Spot Rate Committee of the Karachi Cotton Association has maintained the spot rate stable at PKR 16,300 per maund. Karachi Cotton Brokers Forum Chairman Naseem Usman said that international cotton prices remained stable overall. New York cotton futures were priced between 68 to 70 cents per pound. According to the USDA's weekly export and sales report, 32,700 bales were sold for the 2024-25 season. Vietnam led the buyers with 4,600 bales, followed by Honduras with 200 bales, and Nicaragua with 200 bales. For the 2025-26 season, sales reached 132,600 bales, with Vietnam again topping the list by purchasing 42,800 bales. Pakistan secured the second position with 20,400 bales, while Guatemala came in third with 19,700 bales. The All Pakistan Textile Mills Association (APTMA) extends its deepest and most heartfelt gratitude to Field Marshal Syed Asim Munir, NI (M) for graciously meeting with a business delegation led by Dr Gohar Ejaz, HI, SI (Civ). 'We salute the Field Marshall's exemplary commitment to engaging with the business community and industry, demonstrating both patience and concern for economic issues faced by the businesses and people of Pakistan.' During the highly constructive meeting, the delegation commended the government and SIFC's monumental efforts that have brought much-needed economic stability to the country and thanked the Army Chief for his unwavering support and resolve. It presented a comprehensive overview of the challenges faced by the industrial sector, with particular emphasis on the recently enacted expansions of the Federal Board of Revenue's (FBR) powers. We are immensely thankful to Field Marshall Munir for immediately directing that the new provisions, particularly those added under Sections 37A and 37B of the Sales Tax Act, 1990 pertaining to arrest and detention, be held in abeyance, and for instructing the FBR to enter meaningful, solution-oriented dialogue with stakeholders and address their concerns. The GHQ will oversee progress through the Special Investment Facilitation Council (SIFC), fostering an environment of collaboration and trust. The delegation called for interest rates to be brought down in line with inflation to stimulate businesses and economic activity. It also highlighted the significant delay in notification of the Export Facilitation Scheme (EFS) amendments relating to exclusion of cotton, cotton yarn, and fabric from the scheme and imposition of an 18% sales tax on their imports. Field Marshal Munir assured the delegation that these measures, as announced in the Finance Minister's budget speech, will be implemented without delay. APTMA is grateful for the Field Marshall's attention to unsustainable electricity prices that are burdening manufacturers and businesses across the country. We appreciate his ongoing commitment to securing more competitive electricity rates for consumers nationwide, with special emphasis on revitalizing the industrial and export sectors. His unwavering support is a testament to his overarching vision to propel Pakistan's economic landscape to new heights. On behalf of the entire textile sector and business community, APTMA once again extends its profound gratitude to Field Marshal Syed Asim Munir NI (M) for his visionary leadership and steadfast dedication to Pakistan's progress and growth. The Pakistan Business Forum (PBF) has called on the Federal Board of Revenue (FBR) to immediately issue a Statutory Regulatory Order (SRO) for imposing 18% general sales tax (GST) on imported cotton, as outlined in the Finance Bill 2025. In a statement, the PBF emphasised that despite clear announcement in the federal budget to tax the imported cotton, its implementation was pending due to the absence of the required SRO. 'More than three weeks have passed since approval of the budget, yet the delay continues without any justifiable reason.' According to the PBF, credible reports indicate that certain influential interest groups are obstructing the issuance of the SRO. 'The government must ensure transparency and move forward in the interest of local cotton growers and the economy,' said PBF Chief Organiser Ahmad Jawad. The forum cautioned that cotton imports had exceeded domestic production for the first time in Pakistan's history – a development that poses serious risks to sustainability of textile and agriculture sectors. 'The FBR must act urgently, keeping in view the seriousness of the issue and release the SRO without further delay,' it said. The forum disclosed that importers had already entered into agreements for 7.5 million bales of cotton from international markets. 'After much effort, local cotton farmers finally achieved a level playing field through legislation. The time has come to translate that into action,' Jawad said. To reclaim Pakistan's status as a leading cotton-producing nation, he underlined the need for federal and provincial governments to launch a nationwide cotton revival programme. He recommended that the import of raw material, especially those impacting domestic industries, should be entirely excluded from the Export Facilitation Scheme. The forum also expressed concern over the current state of cotton crops. According to the latest figures, Sindh's performance remains particularly troubling, with reported supply of only 152,650 bales so far this year, compared to 327,666 bales in the same period of last year – a decline of 53%. In contrast, Punjab has shown relatively better results, with supply of 145,101 bales, reflecting a 27% rise over last year. Notable growth has been observed in several districts, including Khanewal (28,825 bales), Vehari (33,950 bales), Dera Ghazi Khan (19,397 bales) and Rajanpur (9,200 bales) – all recording improved yields. The Cotton Crop Reporting Center (CCRC) Punjab has been accused of releasing exaggerated cotton production data, contrary to actual facts. Investigations reveal that CCRC determines Punjab's total cotton yield by extrapolating the weight of cotton from a single boll to an assumed number of bolls per acre across the province. In some districts, production estimates are based on small experimental plots measuring just eight feet in length and six feet in width. For years, Pakistan Cotton Ginners Association (PCGA) has alleged that CCRC Punjab's production figures are consistently higher than actual market data, causing significant challenges for cotton stakeholders in planning their strategies. Some industry players have even suggested that the inflated numbers may be linked to undocumented sales by certain ginners. The discrepancy in data has also led to confusion in international forums, where Pakistan faces skepticism over its official cotton production claims due to conflicting reports. Ahsan-ul-Haq, Chairman of the Cotton Ginners Forum, highlighted that as of July 15, PCGA reported Punjab's cotton production at 145,000 bales, while CCRC Punjab claimed 335,000 bales—a staggering difference. He criticized CCRC's methodology, stating that estimating province-wide production based on a few bolls or small test plots is unrealistic and misleading. Haq urged CCRC Punjab to adopt a more transparent approach, similar to PCGA's practice of collecting bi-weekly sales and stock data from ginning factories. He recommended that CCRC staff gather real-time data from ginning units and grain markets to provide accurate production figures, ensuring better decision-making for stakeholders and restoring credibility in Pakistan's cotton. Sajid Mahmood, Head of the Technology Transfer Department at the Central Cotton Research Institute (CCRI) Multan, has urged cotton farmers to follow the recommendations of CCRI's agricultural experts regarding the impact of monsoon rains on the cotton crop. He stated that while timely and moderate monsoon rains can be beneficial for the crop, continuous and heavy rainfall can cause severe damage. Last year as well, heavy rains and other challenges significantly affected cotton production, resulting in only 6 million bales. Therefore, proactive precautionary measures are essential to prevent potential losses this season. He explained that excessive rainfall can lead to unwanted plant overgrowth, rapid weed development, and increased risk of pest attacks—especially pink bollworm. Immediate steps must be taken to ensure proper drainage in the fields, and rainwater should be removed within 24 hours. Digging a pit about four feet deep in one corner of the field can help collect water and ease drainage. Regarding weed control, Sajid Mahmood advised hoeing (godi) as soon as the field conditions allow. If the crop has reached a height of three feet or more, the use of tractors should be avoided to prevent damage. Instead, lighter agricultural tools like kusola should be used. For managing weeds, he recommended spraying glyphosate (1 liter per 100 liters of water) only in triple-gene cotton varieties. In conventional varieties, the use of 'Shield' is mandatory. He emphasized the importance of eliminating weeds before they begin to seed. Furthermore, Sajid Mahmood advised farmers to avoid unnecessary irrigation in anticipation of rainfall. If irrigation is required, it should be done lightly in the evening. In case symptoms of parawilt or wilting appear on the crop, apply 500 grams of potassium nitrate or potassium sulfate as a foliar spray, or apply 10 to 15 kilograms of potassium sulfate through irrigation. Copyright Business Recorder, 2025
Business Recorder
3 days ago
- Business
- Business Recorder
Cotton fiber, yarn, greige cloth: 18% ST imposed on import?
ISLAMABAD: The Federal Government has reportedly imposed an 18 percent sales tax on the import of cotton fibre, yarn, and greige cloth, following nearly a month-long delay, amid sustained pressure from the All Pakistan Textile Mills Association (APTMA). On July 18, 2025, APTMA formally urged Finance Minister Senator Muhammad Aurangzeb to issue a Statutory Regulatory Order (SRO) immediately to implement sales tax on these imports, in line with commitments made in the Federal Budget 2025–26. In a letter to the Finance Minister, APTMA Chairman Kamran Arshad emphasised the budget's announcement that cotton fibre, yarn, and greige cloth imports would be subjected to 18 percent sales tax, while remaining under the Export Facilitation Scheme (EFS). Selective buying on cotton market 'The Federal Cabinet has approved the Finance Ministry's summary through circulation to fulfil the commitment made to APTMA,' the sources confirmed. APTMA had initially sought complete exclusion of these imports from the EFS, arguing that unrestricted imports were harming domestic industry. However, during the budget process, the government instead committed to equalizing the tax treatment of local and imported inputs used for exports, rather than removing them from the scheme altogether. The Association, in its letter, criticized the delay, noting that substantial time had passed since the budget speech and over three weeks since its formal approval. According to a decision by the Deputy Prime Minister's Committee, the tax was originally meant to take effect on July 15. APTMA warned that the delay had coincided with the arrival of Pakistan's new cotton crop, which was facing a lack of buyers due to market uncertainty. The tax disparity, they stated, had eroded demand for locally grown cotton and domestically produced yarn and greige cloth. The Association further argued that, in the absence of a level playing field, both traders and mills were reluctant to purchase the new crop. The textile sector — which accounts for over 50% of Pakistan's total exports — has shown robust growth with a $1.5 billion increase in FY 2024–25. However, the sector also saw a $1.5–$2 billion rise in imports, resulting in a net negative effect on the balance of payments. Copyright Business Recorder, 2025
Business Recorder
4 days ago
- Business
- Business Recorder
Cotton fiber, yarn, greige cloth: 18pc ST imposed on import?
ISLAMABAD: The Federal Government has reportedly imposed an 18 percent sales tax on the import of cotton fiber, yarn, and greige cloth, after nearly a month-long delay sustained pressure from the All Pakistan Textile Mills Association (APTMA). On July 18, 2025, APTMA had formally urged Finance Minister Senator Muhammad Aurangzeb to immediately issue a Statutory Regulatory Order (SRO) to implement the sales tax on these imports, in line with commitments made in the Federal Budget 2025–26. In a letter to the Finance Minister, APTMA Chairman Kamran Arshad emphasised the budget's announcement that cotton fiber, yarn, and greige cloth imports would be subjected to 18 percent sales tax, while remaining under the Export Facilitation Scheme (EFS). Selective buying on cotton market 'The Federal Cabinet has approved the Finance Ministry's summary through circulation to fulfil the commitment made to APTMA,' the sources confirmed. APTMA had initially sought complete exclusion of these imports from the EFS, arguing that unrestricted imports were harming domestic industry. However, during the budget process, the government instead committed to equalizing the tax treatment of local and imported inputs used for exports, rather than removing them from the scheme altogether. The Association, in its letter, criticized the delay, noting that substantial time had passed since the budget speech and over three weeks since its formal approval. According to a decision by the Deputy Prime Minister's Committee, the tax was originally meant to take effect on July 15. APTMA warned that the delay had coincided with the arrival of Pakistan's new cotton crop, which was facing a lack of buyers due to market uncertainty. The tax disparity, they stated, had eroded demand for locally grown cotton and domestically produced yarn and greige cloth. The Association further argued that, in the absence of a level playing field, both traders and mills were reluctant to purchase the new crop. The textile sector — which accounts for over 50% of Pakistan's total exports — had shown robust growth with a $1.5 billion increase in FY 2024–25. However, the sector also saw a $1.5–$2 billion rise in imports, resulting in a net negative effect on the balance of payments. Copyright Business Recorder, 2025
