PTA demands VAT exemption for hides, skins-Texglobe

LAHORE (June 13 2010): The Pakistan Tanners Association (PTA) has demanded of the Ministry of Commerce to exempt hides and skins from the value-added tax (VAT), being agriculture products. The Association pointed out that under Section 6 of Sales Tax Act 1990, read with SRO 509(1) 2007 dated June 9, 2007 and SRO 535 (1) 2005 dated June 6, 2005 hides and skins are exempted from levy of sales tax, being agricultural produce, and thus need to be exempted from the VAT from the next financial year.

The PTA, in a letter to the Ministry of Commerce, also pointed out that leather exports have registered continuous decline to $1001.194 million during financial year 2007-8, $808.331 million in 2008-09 and $686.488 during the year 2009-10 (July-April). Under these circumstances, the leather industry needs special attention, which is providing employment to more then 500,000 people in the country.

The net decline in exports since 2007-08 is more than 31 percent. The most important factor to be taken into consideration is that tanning industry buys 40 percent of its annual requirements of hides and skins on Eid-E-Qurban from mohala mosques, hospital, orphans houses, charity homes, political parties, religious parties and from imam barghas.

It is impossible for the tanners to bring these people in VAT regime who do just one transaction in whole year and none of them is registered in any tax department of Pakistan. Similarly, the hides and skins coming from remote areas of interior Punjab, Sindh, NWFP and Balochistan can not be entered into this regime. Tanning industry is based on the raw material which is by-product of meat and beef and poor class of the country is directly benefited from this industry.

The Association said the tanning industry is already under severe pressure; thus the government should adopt rational approach towards the tannery industry which is a mother industry of footwear, leather garments, leather gloves and leather goods. It was further pointed out that discontinuation of zero rating of this important sector would be a big blunder in present circumstances.