The All Pakistan Textile Mills Association (APTMA) on Monday urged the Federal Board of Revenue (FBR) to allow the adjustment of super tax liabilities against long-pending sales tax, income tax, and other refund claims, warning that immediate recovery measures could severely disrupt the already cash-strapped textile sector.
In a press statement, APTMA Chairman Kamran Arshad highlighted that the textile industry is currently operating under intense financial pressure due to persistently high energy costs, elevated interest rates, excessive taxation, and an overall weak business environment. He said these factors have significantly reduced the sector’s capacity to absorb a one-time recovery of super tax without undermining day-to-day operations.
Arshad cautioned that enforcing immediate recovery of super tax in a single tranche would not only strain individual businesses but could also have wider repercussions for the national economy. He noted that the industry is already struggling to remain competitive amid rising imports of raw materials and intermediate inputs, which are displacing domestic upstream segments and eroding local value chains.
He further warned that the immediate demand for super tax, amounting to hundreds of billions of rupees, would drain working capital across the sector. According to him, such a move would disrupt cash flows and make it increasingly difficult for manufacturers to meet routine obligations, including payment of salaries, utility bills, and other essential financial commitments.
The APTMA chairman urged the FBR to permit the adjustment of super tax liabilities against pending income tax, sales tax, and other refund claims, including refunds under the Technology Upgradation Fund (TUF) and the Duty and Tax Remission for Exports (DLTL) scheme. He argued that this approach would provide much-needed liquidity relief while ensuring that the government’s revenue objectives are met in a more sustainable manner.
In addition, Arshad proposed that any remaining super tax liability, after adjustments, should be converted into easy and business-friendly instalments. He said such a mechanism would help companies manage their cash flows more effectively without jeopardising production, employment, or export commitments.
Raising technical concerns, Arshad pointed out that the computation of super tax under Section 4C for exporters should be based on imputable income, as exporters remained under the Final Tax Regime up to tax year 2024. He stressed that imputable income should be determined through reverse computation, corresponding to tax already paid under the Final Tax Regime, to arrive at an equivalent liability under the Normal Tax Regime.
Given the broad implications for the export-oriented textile sector, Arshad called on the FBR to engage with APTMA and other relevant stakeholders to develop a generic clarification on the application of Section 4C. He warned that the absence of clear guidance could lead to inconsistent interpretations and further uncertainty for businesses.
He also urged the tax authority to immediately suspend recovery proceedings until these issues are resolved. Arshad cautioned that failure to provide timely relief could result in large-scale closures of textile units, including small and medium enterprises, leading to job losses, reduced export earnings, and a shrinking tax base, ultimately weakening the broader economy.
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