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Business Recorder
11-07-2025
- Business
- Business Recorder
Ideal Spinning Mills shuts spinning unit amid unfavourable conditions & rising costs
In a setback for the country's key textile sector, Ideal Spinning Mills Limited has decided to shut down its spinning operations, citing unfavourable market conditions and rising costs. The textile mill disclosed the development in its notice to the Pakistan Stock Exchange (PSX) on Friday. 'The Board of Directors of Ideal Spinning Mills Limited in its meeting held today, i.e. 11 July 2025, has accorded approval for sale/disposal of the company's spinning segment's major portion of plant and machinery,' read the notice. The company said the decision has been taken given prevailing unfavourable conditions for spinning,g especially demand for yarn and costs of operations. 'Hence, the company will discontinue its spinning operations but continue with its weaving and socks units,' it informed. The Board of Directors have decided to convene an Extraordinary General Meeting (EoGM) to seek the stakeholders' approval in this regard. Ideal Spinning Mills Ltd is a public limited company incorporated in Pakistan on 8 June 1989 under the Companies Ordinance, 1984. The principal activity of the Company is the manufacturing and sale of yarn, cloth and hosiery products. Days ago, the textile export industry urged the government to immediately address unresolved budget anomalies, as continued inaction could disrupt exports and weaken exporters' confidence. Pakistan stands at a crossroads, and with the right policy support, exporters can generate growth, employment, and economic stability, said Chairman Pakistan Textile Exporters Association Sohail Pasha. He pointed out that Pakistan's value-added textile sector is currently facing severe setbacks due to taxation measures introduced in the Finance Act 2024, which replaced the simplified Final Tax Regime (FTR) with the more burdensome Normal Tax Regime (NTR). He said export proceeds are subject to the deduction of 1% Advance tax under Section 154 as minimum tax. Simultaneously, an advance tax @1% has been levied through the insertion of sub-section (6C) in section 147; however, contrary to this, local supplies are liable to payment of 1% advance tax.
Business Recorder
08-07-2025
- Business
- Business Recorder
Textile exporters demand govt address unresolved budget anomalies
FAISALABAD: The textile export industry has urged the Government to immediately address unresolved budget anomalies as continued inaction could disrupt exports and weaken exporters' confidence. Pakistan stands at a crossroads and with right policy support; exporters can generate growth, employment, and economic stability, said Chairman Pakistan Textile Exporters Association Sohail Pasha. He pointed out that Pakistan's value-added textile sector contributes over $9 billion to national exports annually, supports millions of livelihoods, and remains a key pillar of the country's economic stability. Yet, this sector is currently facing severe setbacks due to taxation measures introduced in the Finance Act 2024, which replaced the simplified Final Tax Regime (FTR) with the more burdensome Normal Tax Regime (NTR). He said export proceeds are subjected to deduction of 1% Advance tax under Section 154 as minimum tax. Simultaneously, an advance tax @1% has been levied through insertion of sub-section (6C) in section 147; however, contrary to these local supplies are liable to payment of 1% advance tax. Treatment meted out to exporters is discriminatory and against the principles of equity and natural justice, he lamented. He added that despite repeated representations and firm commitments, the budget-makers have failed to correct this anomaly. Meanwhile, the Export Facilitation Scheme (EFS), previously essential for importing raw materials not produced locally or required by international buyers from nominated suppliers, has been burdened with excessive conditions, restricting access to critical inputs and damaging export competitiveness. Highlighting the serious concerns regarding the amendments made to the EFS, particularly the removal of zero-rating on local procurement of input goods and the imposition of sales tax at the import stage of cotton yarn, he stressed that these changes undermine the very objectives of EFS, which was introduced to simplify export procedures, reduce liquidity pressure, and promote digital traceability. He demanded the restoration of the original EFS framework which allowed zero-rated invoicing on local purchases and exempted key raw materials such as cotton yarn from sales tax at the import stage. He noted that Pakistan's regional competitors like Bangladesh and Vietnam continue to provide tax-free access to raw materials for their export industries, giving them a clear advantage in global markets. Pointing out another major issue, Sohail Pasha said that the budget has placed a further strain on exporters' liquidity without making strategy for release of liquidity stuck in Duty Drawback of Local Taxes (DLTL), Technology Upgradation Fund (TUF) and Mark up Support Scheme regimes. He said that around PKR 36 billion are pending for payment under textile policy incentives and if these amounts are released, exporters can deploy the capital towards expanding their businesses, which in turn will help Pakistan's export earnings grow. Considering high production cost a major hurdle in export growth, he said that no strategy is designed to reduce the production cost of export items in the budget. Similarly, no relief is given to the export industries in energy input prices which are the major element of production cost. He feared that the budgetary measures would erode the competitiveness of Pakistani exporters in the global market, potentially leading to a decline in export revenue and foreign exchange earnings. He urged the government to reconsider the budgetary measures and restore the confidence of exporters by addressing the anomalies to achieve the desired targets. Copyright Business Recorder, 2025
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Business Standard
03-07-2025
- Business
- Business Standard
New cost inflation hike by CBDT brings relief for property sellers: Experts
'The higher cost inflation index helps cushion sellers from rising prices, lowering their taxable gains,' say experts, making long-term property sales more tax-friendly. The Income Tax department has notified the Cost Inflation Index (CII) for the financial year 2025-26 at 376, up from 363 last year. While this may sound like a any other ordinary number, it is of great significance for taxpayers selling long-term assets, particularly real estate acquired before July 23, 2024. Here's how experts break it down. CII: A cushion against inflation 'The Cost Inflation Index (CII) of 376 is not just a number, it's a powerful mechanism to adjust the purchase price of long-term assets for inflation,' says Niyati Shah, chartered accountant and head of personal tax at 1 Finance. For property owners, the higher CII allows for a substantially increased indexed cost of acquisition, effectively lowering taxable capital gains. Shah explains, 'This is especially impactful for those selling high-value real estate and legacy assets. The higher the CII, the more it cushions sellers from inflation-led erosion of asset value and helps preserve post-tax returns.' Who can claim indexation? Post the Finance Act 2024, indexation benefits are now preserved for assets bought before July 23, 2024, and only certain taxpayers can claim them. As Pawan Kumar Agarwal, managing director of Nklusive, points out, 'Individuals and HUFs, being normal residents of India, are still eligible to claim indexation benefits, but only for land and building purchased before July 23, 2024, and held for over two years.' Assets like gold, stocks, or any other capital asset no longer qualify for indexation benefits, even if bought before this cut-off. 12.5 per cent Flat Tax vs 20 per cent with Indexation: Which is better? A key decision for taxpayers now is whether to pay 20 per cent LTCG tax with indexation or opt for a 12.5 per cent flat tax without it. Shah advises, 'Indexation meaningfully increases the cost of acquisition, especially for long-held assets. For older properties, the 20 per cent rate with indexation often results in lower effective tax.' To illustrate, she says, 'A flat bought in June 2010 for Rs 30 lakh and sold in October 2025 for Rs 1 crore would attract Rs 8.75 lakh tax without indexation. But with the latest CII of 376, the inflation-adjusted cost becomes Rs 67.5 lakh, and tax reduces to Rs 6.49 lakh, a saving of over Rs 2.25 lakh.' Experts urge computation before choosing 'Taxpayers should compute both options and choose the one with lower liability,' suggests Agarwal. 'For long-held assets, indexation remains advantageous in most cases. But for assets with modest gains, the 12.5 per cent flat rate could be more efficient.' Vivek Jalan, partner at Tax Connect Advisory Services LLP, echoes this, adding that for assets like real estate held for decades, 'indexation often wipes out the LTCG exposure entirely or reduces it significantly.' Documentation is key Experts also caution taxpayers about compliance. Abhishek Singh, director at V3 Infrasol, highlights common mistakes. 'Using the wrong CII year, ignoring improvement costs, or misreporting acquisition year can lead to higher taxes or scrutiny. Retain all original deeds, receipts for improvements, and calculate carefully.' Real estate market adapts to tax changes From a property market perspective, Manjunath HR, managing partner at Aakruthi Properties, observes, 'Many sellers rushed to offload properties before the July 2024 deadline to retain indexation benefits. But even now, understanding tax implications is critical for optimising returns, especially in premium and luxury housing segments.' Key takeaway If you own property acquired before July 23, 2024, the new CII value of 376 offers meaningful relief in computing long-term capital gains. But deciding between the old and new tax regimes isn't straightforward. As Shah summarises, 'It's not a one-size-fits-all decision. Do the math or consult a tax advisor to pick the most tax-efficient route.'
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Business Standard
02-07-2025
- Business
- Business Standard
CBDT sets Cost Inflation Index at 376 for FY26 for capital gains
The Central Board of Direct Taxes (CBDT) has notified the Cost Inflation Index (CII) for the financial year 2025–26 at 376, up from 363 in 2024–25. The new index will be used to calculate long-term capital gains for the assessment year 2026–27 and subsequent years. The notification will come into effect from April 1, 2026. The CII helps taxpayers adjust the purchase price of assets for inflation, thereby reducing their taxable capital gains when those assets are sold. According to Amit Maheshwari, tax partner at AKM Global, a tax and consulting firm, the revision of the CII to 376 for FY26 is an annual update that enables taxpayers to adjust their capital gains for inflation more accurately each year. 'This effectively reduces the tax liability on long-term capital assets and ensures that individuals and businesses are taxed only on real gains, not on notional appreciation due to inflation. It is a key mechanism that brings fairness and efficiency to India's capital gains tax regime. Historically, CII was used in cases of long-term capital gains for assets such as land, buildings, patents, gold, securities, etc,' said Maheshwari. Notably, the Finance Act 2024 withdrew the benefit of indexation using the CII for all assets sold after July 23, 2024. However, taxpayers selling land or buildings acquired before that date can still choose between paying tax at 12.5 per cent without indexation or 20 per cent with indexation. 'In that case, taxpayers have the option to pay tax at 12.5 per cent without indexation or 20 per cent with indexation. Hence, the revised CII of 376 is useful for taxpayers who will sell land and buildings acquired before July 23, 2024,' Maheshwari added.
Business Recorder
19-06-2025
- Business
- Business Recorder
PDA seeks cut in packaged milk tax to 5pc
LAHORE: The Pakistan Dairy Association (PDA) on Wednesday urged the government to immediately reduce the 18 percent sales tax on packaged milk to just 5 percent to provide relief to consumers, stimulate industrial activity, and generate higher revenue for the national exchequer. Under the Finance Act 2024, both liquid and powdered milk have shifted from zero-rated to an 18 percent sales tax. According to PDA representatives, this rate is not only excessive but also unprecedented globally. 'No developed or developing country imposes such a high tax on a basic nutritional commodity like milk,' they said. 'Since the imposition of this tax, the price of a one-liter pack of milk has surged from Rs 280 to Rs 350. If the industry's suggestion to reduce the tax is accepted, prices could potentially drop by Rs 50 per liter,' said PDA Chairman Usman Zaheer, along with CEO Dr. Shahzad Iqbal, Dr Nasir, Mian Mitha, and Noor Aftab, while addressing a press conference. Zaheer highlighted that the formal dairy industry has already reduced its milk procurement from farmers by 20 percent due to the increased tax burden. This has forced nearly 35 percent of farmers to unregulated loose milk trade from formal market. Consequently, around 20 percent of milk collection centers have shut down, disproportionately impacting small-scale dairy farmers. In addition, farmers have lost quality and safety-based incentives worth Rs 10 to 15 per liter, while prices of loose milk have climbed by Rs 30 to 40 per liter - profits that do not benefit the producers. This policy has also discouraged farm productivity and long-term investment in the dairy sector. Citing a Nielsen study, Zaheer pointed out that two-thirds of Pakistani consumers earn less than Rs 50,000 per month. With prices now higher, many low- and middle-income families are forced to turn to loose milk which lacks quality control and safety assurances. 'Milk - one of the most nutritious staples in the average food basket - has now become unaffordable for many,' he said. PDA CEO Shahzad Iqbal added that the formal dairy industry is now facing serious setbacks and has shelved an annual investment of Rs 1.3 billion meant for farm development and support. With processing plants now operating at less than 50 percent capacity and profits under severe pressure, many companies have halted investment in branding and innovation over the past two quarters. Around 20 percent of employees in the formal dairy sector have already been laid off, and an annual Rs 400 million investment in consumer conversion programs has also been abandoned. This, Iqbal warned, is putting Pakistan's $30 billion dairy export potential at serious risk. He further said the informal sector - gawalas and shopkeepers - is now generating nearly Rs 1,319 billion annually due to the gap created by the tax on formal milk. 'The widening price gap and lack of enforcement are driving consumers toward unsafe loose milk, which not only endangers public health but also strengthens the undocumented economy,' he cautioned. Copyright Business Recorder, 2025
