Finance minister Abul Hassan Mahmood Ali on Thursday proposed increasing the minimum value of certain imported products, including printed cotton and synthetic fabrics, to safeguard the local industry.
In the proposed budget for fiscal year 2024-25, he suggested raising the value of printed cotton fabrics at import level to $4.0 a kilogram from the going rate of $3.0.
Mr Ali also proposed an enhancement in the minimum value of polyester/synthetic fabrics to $4.50 a kilogram from $3.0.
Polyester staple fibre and polyethylene terephthalate chip (textile grade) products are widely used materials for textile industry.
On the other hand, the main raw materials used in the production of these two products are purified terephthalic acid (PTA) and mono-ethylene glycol (MEG).
Therefore, the total tax incidence on the finished goods is less than its raw material.
To remove this discrepancy and protect the domestic industry, the minister said: "I propose to impose 1.0 per cent customs duty on PTA and MEG and waive all other duties and taxes on these two raw materials."
He also proposed waiving all other taxes except customs duty of 5.0 per cent and advance income tax for importing chiller with a capacity of 50 tonnes or more.
Chiller is used as essential capital equipment in various industries.
A total duty of 104.68 per cent is applicable to the import of the item, which is not conducive to the related industries, said Mr Ali.
The source tax on export proceeds of ready-made garment industry has remained unchanged in the proposed budget, despite the fact that apparel makers have been demanding cuts in the rate.
Neither the finance bill nor the budget speech has mentioned any change regarding the rate.
According to the income tax ordinance, a 1.0-per cent source tax on export proceeds is applicable.
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