Ministry of Textile Industry has notified revised Prime Minister Package of incentives for exporters (textile sector) under which 50 percent of the rate of drawback of local taxes and levies shall be provided without condition of increment.
The textile division has notified that duty drawbacks under this order shall be allowed for exports goods declaration (GDs) filed on or after July 1st, 2017 to 30th June, 2018 at the rate of:
- 7 percent for garments,
- 6 percent for made-ups,
- 5 percent for processed fabrics,
- 4 percent for greige fabric and yarn.
The notification issued on Friday states that in pursuance of entry 7 of item 39 of Schedule II of the Rules of Business, 1973, the Prime Minister package of incentives for exporters approved by Economic Coordination Committee (ECC) of the Cabinet in order to provide duty drawback of taxes collected from garments, home textiles, processed fabric, greige fabric and yarn manufacturing cum-exporter units and duty drawback of taxes order 2016-17, textile division make the order, namely: “Duty Drawback of Taxes Order 2017-18”.
It extends to the whole of Pakistan including export processing zones and shall come into force at once.
The duty drawbacks under this Order shall be allowed for exports GDs filed on or after July 1st, 2017 to 30th June, 2018 as;
- 50 percent of the rate of drawback shall be provided without condition of increment.
- Remaining 50 percent of the rate of drawback shall be provided if the exporter achieves an increase of 10% or more in exports during performance year (fiscal year 2017-18), as compared to the base year (fiscal year 2016-17).
- The actual rate of drawback against (2) above shall be determined on the basis of annual performance of the exporter, but in order to improve her/his cash flow, the disbursement against (2) above shall be allowed on the performance during July-December, 2017, subject to submission of a bank guarantee that the exporter will return the excess amount, in case his/her annual exports are less than the amount of drawback paid to him/her.
An additional 2% drawback shall be allowed for exports to non-traditional markets i.e. Africa, Latin America, non-EU European countries, Commonwealth of Independent States and Oceania.
The duty drawback shall be provided to manufacturing-cum exporting units on export of products under specific tariff codes of the Pakistan Customs Tariff.
The drawback shall be available only to manufacturing-cum exporting units. The export performance in case of drawback at 1(4) (b) above shall be analyzed separately for each category of eligible products. The units availing the drawback shall be registered with the Textile Division and use Textile Division’s online portal to follow subsequent Circular (s) issued by State Bank of Pakistan stipulated under para 4 (1) of this Notification.
The unit availing the drawback shall be a registered sole proprietor, partnership or a company, and shall be a member of a textiles association registered with the Directorate of Trade Organizations, Ministry of Commerce & Textile.
The units shall furnish data and any information related to its operations, domestic sales, accounts and exports as and when required by the Textile Division.
Each textiles association shall be responsible for certifying the authenticity of information provided by the exporting units pertaining to application documents for claims under this Order. The Association concerned shall exercise due diligence to ensure authenticity of the documents.
Only notified executive members of the association shall be eligible for verifying the claim documents.
State Bank of Pakistan in consultation with Textile Division and stakeholders shall devise mechanism to ensure prompt clearance of drawback claims in compliance of this order.
Procedure as devise by State Bank of Pakistan shall be communicated to Ministry of Commerce & Textile, Textile Division for onward communication to all stakeholders.
For implementation of Para 1(4) (a) and (d); a) The Authorized Dealers will scrutinize the claim as per the procedure circulated by SBP, if found in order, and claim the amount from SBP for onward credit to the unit. The whole procedure will be completed within fortnight from the receipt of the claim. b) SBP will release the amount of claim to the Authorized Dealers within forty eight (48) hours after receipt by debiting the relevant Government head of account. c) The Authorized Dealer will credit the amount of claim received from SBP within twenty four (24) hours to the unit.
SBP will issue a separate circular for implementation of Para 1(4)(b) and (c) in consultation with the Ministry of Commerce & Textile.
The receipt of drawback payments shall be properly reflected in the books of accounts or balance sheets of the unit. SBP shall conduct verification of claims on sample basis. The procedure of sampling shall be issued by the SBP. The federal government reserves the right to conduct periodical, random, on the spot checks and audits to verify the claims filed and drawbacks received by the units under this order.
Any unit/Authorized Dealer which, in contravention of the provisions of this SRO and SBP’s Circular, through acts of omission or commission files/verify fraudulent claims shall be liable to penalty as determined by SBP in their circular.
The appellate authority for penalties on units shall be the SBP. Textiles associations verifying the duty drawback claims shall submit quarterly reports of verifications to the Textile Division with Chairman’s signature after taking printout from their online panel.
The federal government reserves the right to make any changes, additions, deletions and modifications in the Scheme under this Order which it may consider necessary. Any interpretation or clarification required regarding the application of this Order shall be made by the Textile Division. The drawback under this Order shall be allowed for the GDs from July 1st 2017 till 30th June, 2018.