Islamabad - The Ministry of Textiles said on Tuesday that amount of around Rs 50 billion belonging to the textile sector had been stuck up at the FBR.

In its interim report, compiled on the basis of input received from textile associations, the ministry said that out of the total amount, more than Rs 35 billion belonged to the value added textile mills, while more than Rs 15 billion were due under the head of custom rebate refunds.

The report was presented and discussed in the meeting of a subcommittee of National Assembly’s Standing Committee on Textiles, formed early this year to address the issues confronting the textile sector.

The ministry’s report, largely based on the minutes of last meeting, gave textiles associations’ view according to which huge sales tax refunds had been pending with the FBR, thus creating liquidity shortage for the exporters.

It said that despite government’s commitment to pay the refunds, even those claims cleared by the Ministry of Finance were still pending.

“The Value added textile associations claim that approximate quantum of stuck up refunds was around

Rs. 35 billion,” report said, adding the textile associations feared that five export oriented sectors, including textile, might be placed in zero rating at zero sales tax.

It suggested that as per request by the textile associations, the input claim might be allowed if the seller was an active taxpayer at the time of such purchases to avoid deferred cases, while previous sales tax liabilities could be paid at once.

Quoting textile associations further, it put forward textiles associations’ demand that custom rebate refunds may be paid with the export proceeds, while the previous rebates may be paid at once.

The associations also raised the issue of cost of doing business in which major concerns were over electricity and GIDC. “Two electricity surcharges, Tariff Rationalisation Surcharge at Rs.3 and Financial Surcharge at Rs.0.40, have been introduced which have increased our cost of doing business,” the associations heads were quoted as saying.

“Interestingly, despite announcement by the PM to reduce tariff by Rs.3, the actual compensation was only in fuel adjustment charges,” the report noted.

The textiles associations also expressed concern over the non-availability of water in Karachi, and requested for uninterrupted water supply to the export oriented units.

According to the officials, the subcommittee will finalise its report in the next meeting, and will later submit to the Standing Committee on Textiles in the next meeting.

The textile sector in Pakistan has an overwhelming impact on the economy, contributing 57 percent to the country’s exports.

However, for the last few years, textile exports have gone downhill.