Customs Intelligence has discovered that unscrupulous industrial importers, availing tax exemption of 7.5 percent on the import of yarn, are allegedly involved in its sale on a commercial basis to other entities.
Sources told ProPakistani that Customs Intelligence Karachi has informed the Director Customs Intelligence and Investigation, Customs Islamabad regarding the alleged commercial sale of yarn imported by a few unscrupulous industrial importers.
The industrial importers of yarn are entitled to a cumulative benefit of 7.5 percent of duties and taxes over commercial importers. They are entitled to an exemption of 3 percent AST under 12th schedule of the Sales Tax Act 1990, 2 percent ACD under SRO 965(1)/2022 dated 30/06/2022, and payment of 1 percent tax in term of SRO 1125(1)/2011 dated 31/12/2011 as it stood on 28/06/2019 instead of 3.5 percent paid by the commercial importers.
It is pertinent to mention that the annual demand for imported yarn in the country is more than 0.8 million tons valued at Rs. 375 billion. This implies that even a small quantum of commercial sales by the industrial importers results in a huge loss to the national exchequer.
Sources said that the commercial entities and industrial importers imported Rs. 26 billion and Rs. 268 billion worth of yarn in 2020-21. Similarly, the commercial entities and industrial importers imported Rs. 39 billion and Rs. 373 billion worth of yarn in 2021-22. Furthermore, the commercial entities and industrial importers imported Rs. 25 billion and Rs. 354 billion worth of yarn in 2022-23.
While the matter is being further investigated, Customs Intelligence has said that the information may be circulated to all field formations with the advice to ensure that the import of yarn being allowed to industrial importers after exemption of 7.5 percent in duties and taxes is in consonance with the manufacturing capacity.
