Industries Seek Tax Cuts and Duty Relief in Budget

Textile exporters, telecom operators, dairy producers, and pharmaceutical manufacturers have urged the government to introduce tax relief measures and rationalise duties in the upcoming federal budget, including the abolition of super tax and reductions in withholding tax rates.

According to reports, the proposals were presented during a meeting of the Senate Standing Committee on Finance and Revenue, chaired by Senator Saleem Mandviwalla at Parliament House.

The All Pakistan Textile Mills Association called for the abolition of super tax and rationalisation of withholding taxes applicable to exporters, arguing that the current tax structure is affecting the competitiveness of the textile sector.

The Towel Manufacturers Association of Pakistan proposed restoration of zero-rating status, revision of withholding tax rates for small and medium-sized enterprises, and rationalisation of duties and taxes to ease pressure on exporters.

The Telecom Operators Association submitted a detailed set of recommendations, including the abolition of customs duty on the import of 5G equipment, stating that such relief had previously been committed during the approval process for the latest spectrum auction.

Telecom operators also sought a reduction in withholding tax under Section 153 of the Income Tax Ordinance, 2001 from 6% to 4%, along with an extension in the carry-forward period for turnover tax under Section 113 from two years to five years.

Additional proposals from the telecom sector included reducing advance withholding tax from 15% to 8% and lowering cumulative duties and taxes on optic fibre cable imports from 67% to 5%.

The association further requested withdrawal of the commissioner’s authority under Section 147 of the Income Tax Ordinance, 2001 to reject advance tax estimates submitted by taxpayers.

The Pakistan Dairy Association proposed reducing general sales tax on dairy products from 18% to 10% in the upcoming budget.

Representatives informed the committee that the loose milk market was estimated at approximately Rs7.9 trillion, while the documented dairy sector was valued at around Rs331 billion and contributed nearly Rs53 billion annually in taxes.

The Fruit Juice Council informed lawmakers that sales in the sector had declined by nearly 50% and recommended reducing Federal Excise Duty from 20% to 10%.

The council also urged the government not to classify fruit juices alongside carbonated beverages for taxation purposes.

The Pakistan Poultry Association called for rationalisation of sales tax policies and proposed incentives aimed at encouraging greater participation of women in the formal workforce through salary-related facilitation measures.

Meanwhile, the Pakistan Pharmaceutical Manufacturers Association proposed increasing the foreign exchange retention limit to 35%, introducing performance-based incentives, and reviewing existing sales taxes and hidden taxation impacting the sector.

Representatives of the pharmaceutical industry informed the committee that implementation of the proposed measures could help expand industrial activity and contribute to higher revenue generation.