Federal Budget 2020-21 offers no incentive for the leather sector in Pakistan

The Chairman Pakistan Tanners’ Association, Sheikh Afzal Hussain has pointed out that Federal Budget for the year 2020-21 lacks the basic demands for the Leather Sector of Pakistan. Before the presentations of the budget, the proposals were discussed with MOC, FBR & other Government departments, for incorporation in the budget.

According to Chairman, PTA Sheikh Afzal Hussain, during meetings & discussion with the Advisor to PM on Commerce & Textile, Mr Abdul Razzak Dawood, the firm assurance was given to PTA for the desired inclusion of Core Demands of the Industry, which are vital & mandatory under the present plight of the industry especially under COVID-19.

This vital industry of the country being 2nd most significant export-oriented value-added sector of the country is kept in isolation almost from the beginning despite all assurance for the due attention resultantly the Leather Sector is in a continuous declining trend. Now, the situation is getting from worst to deteriorated gradually because of the severe adverse impact of COVID-19 such as future export orders of leather are jeopardized for cancellation, ongoing shipments are being halted by the foreign customers, due payment against the shipped shipments are stopped/pending by the foreign customers in the result of which the Leather Sector is in severe financial crisis.

In this context, the Chairman, PTA, Sheikh Afzal Hussain strongly emphasized the utmost need to incorporate the following shortlisted essential Demands for the Leather Industry in the proposed Federal Budget for the year 2020-21 as was already ensured to PTA for the inclusion: –


Reinstate the Zero Rated Status for Leather Sector of Pakistan” among rest five sectors of the country, with immediate effect along with restoration of SRO # 1125, which was revoked earlier by the Government OTHERWISE to consider reduction of Sales Tax from 17% to 5% atleast for Leather Sector of Pakistan, which is 95% export oriented sector of the country.


To reduce / remove CD, ACD & AGST on fundamental 8 Tanning Chemicals with H.S. Code Nos. 3202.9010/2915,1100/3202.1000/3403.1110/3403.9100/3204.1200/3204.1400/3402.1300/3210.0020 & 3809.9300.


Removal of further collection of 1% withholding Tax on export proceeds for at least upcoming 3 years.


Removal of further collection of EDS @ 0.25% on export proceeds for at least upcoming 3 years.


The Government has proposed 2% withholding tax on import of necessary raw materials for the Leather Industry by withdrawing the facility for issuance of “Exemption Certificates” on import of essential raw materials WHERES, the Leather Sector is more than 90-95% export-oriented sector of the country and fall within the fixed regime and accordingly cannot be adjusted as well, resultantly the huge funds on account of 2% withholding tax on import of basic Raw materials by our member exporters for this export-oriented industry would ultimately be blocked also with the Government on account of refunds, which could have long pendency for the release with other funds on account of Sales Tax & Income tax etc. and finally this export-oriented industry would be stranded with further financial crunches/crisis, which is already severely facing.

As such removal of proposed 2% withholding tax on import for Leather Sector as pure 95% export oriented Industry is UTMOST necessary to be made by the Government to keep the same mode earlier (before the budget) for the import against “Exemption Certificates” by our member exporters for those whose exports is not less than 80% i.e. case to case basis.


Effect major Cut in the Utility Bills for Electricity & Gas, which are already on very higher side as compared to regional competitors to enable our member exporters to compete in International market for fetching precious foreign exchange in terms of export orders, as the production cost is already exorbitant in Pakistan.


Re-include “dyed/Finished finished leather” in the new DLTL scheme for the year 2018-21 with retrospective effect from July’ 2018 without incremental obligation to avoid discrimination attitude as “dyed/Printed Fabric” is already included in the new DLTL scheme for the textile sector and the Mother Industry of Leather Sector is deprived for the basic incentive.

Sheikh Afzal Hussain, Chairman, PTA APPEALED to the Honourable Prime Minister of Pakistan, Mr Imran Khan and Advisor to PM on Commerce & Textile, Mr Abdul Razzak Dawood for the incorporation of all above shortlisted core demands for this vital industry of the country to save it from further collapse to provide level playing field in comparison with the neighbour competing countries for one common motive for the promotion of leather sector exports, which is desperately required by the country for the national exchequer.

Sharing is caring

Leave a Reply