LAHORE - There is need to review the Sales Tax regime particularly exclusion of hides & skins from the 6th Schedule of the Sales Tax Act, 1990 which badly hits the export-oriented leather sector. The leather products, like shoes, garments, bags, etc. are already subject to Sales Tax. As such, all local sales made from the production of hides and skins are liable to Sales Tax. Therefore, subjecting raw hides and skins to Sales Tax will be taxing the export industry and then creating refund issues and hardships which resultantly impede export business flow.
This was expressed by the Pakistan Tanners Association central chairman Shaikh Saqib Masood during a meeting to raise concern on exclusion of raw hides and skins from the 6th Schedule of Sales Tax Act, 1990 like Phutti (Raw Cotton).
The PTA chairman stated that leather sector is the second largest export earning industry of Pakistan with annual exports of $1.14 billion.
He said that the sector is also employment intensive, as it is providing jobs to more than one million people. The tanning industry is considered as the mother industry of leather garments, footwear, gloves and leather goods industry, producing world’s finest quality leather and leather products. He said that the leather industry having tremendous growth potential can become $ 3 billion industry in next three years if government supports it with provision of level playing field.
Shaikh Saqib Saeed apprised that the hides & skins (dry and wet) are included in the Revised Edition - Manual of Agricultural Produce Market Committee Laws of the Provinces as Agricultural Produce like cotton unginned (phutti), cotton ginned (lint), cotton waste.
Chairman, PTA further pointed out that the leather industry contributes billion of rupees to the national kitty regularly through payment of Customs Duty, Sales Tax, Income Tax, Withholding Tax, Export Development Surcharge (EDS), Tax on Services, EOBI, Social Security etc. During the last six years of export history, the leather exporters paid $15.81 million towards EDS i.e. approximately $2.63 million per annum.
He appealed to the government to consider PTA’s genuine demand and include Hides & Skins in the Sixth Schedule of the Sales Tax Act, 1990 so that exporters may be able to avail exemption from Sales Tax and can play their viable role in propelling exports.