The Karachi Cotton Association has strongly opposed the proposal of the Government to impose a 10 percent sales tax on raw cotton at local stage in the Federal Budget 2019-20 with a view to generate its revenue.
The KCA has always opposed the proposal to impose Sales Tax on raw cotton, as it discourages production and inhibits the smooth flow of exports and runs counter to the laid down Government policy of encouraging cotton trade in the country.
The KCA is of the view that any hindrance in the smooth exports of cotton will also prevent the growers from getting a fair price for their produce, which is a key objective of the Government.
It may be realised by the government that nearly 80 percent-85 percent of the Cotton Crop is exported in the form of Raw Cotton, Cotton Yarn, Cotton Fabrics, Garments and Cotton made-ups and Sales Tax, if levied on Raw Cotton, would be refundable thereon at the export stage.
Taking into consideration, substantial expenses involved in tax collection, administration and in the refund process, the balance available amount to the Government would be comparatively insignificant.
