FBR Imposes 18% Sales Tax on Cotton Imports
Delayed SRO Finally Issued
LAHORE: The Federal Board of Revenue (FBR) has finally issued a new rule (SRO 1359(I)/2025) to impose an 18% sales tax on imported cotton fibre, yarn, and grey cloth.
This decision was part of the 2025–26 budget, but the notification was delayed for almost a month, even after cabinet approval.
Tax Aims to Support Local Cotton Producers
The All Pakistan Textile Mills Association (Aptma) had pushed the government to issue the notification quickly.
They said the tax is important to remove unfair advantages for imported cotton compared to locally grown cotton.
Details of the New Rule
The SRO says that raw cotton, yarn, and grey cloth will no longer get benefits under the Export Facilitation Scheme (EFS).
However, import consignments with bills of lading within 10 days of the notification will not be taxed.
Aptma’s Concerns Over the Delay
Aptma had written to Finance Minister Muhammad Aurangzeb on July 18, asking for faster action.
They said the delay created uncertainty, which hurt demand for Pakistan’s new cotton crop.
Textile Industry at Risk
Because of the delay, traders and mills were not buying cotton, creating problems for local farmers.
Pakistan’s textile sector makes up over 50% of exports and earned $1.5bn more in 2024–25, but rising imports of inputs cut this benefit.
Aptma said timely policies are needed to fix trade imbalances and support local producers.