KARACHI – Abdul Rehman Fudda, President of the S.I.T.E. Association of Industry (SAI), has described the reduction in export withholding tax from 2 percent to 1.25 percent in the Federal Budget 2026-27 as a modest relief for exporters. However, he expressed concern that several key demands of the manufacturing sector remain unaddressed.
Budget Review and Industry Concerns
In a statement commenting on the federal budget, Fudda said the association reviewed the budget with cautious appreciation for certain measures but believed it fell short of addressing the pressing needs of the manufacturing industry. He noted that export-oriented sectors, including textiles, light engineering, chemicals, and processed goods, had expected more comprehensive support.
According to him, the long-standing demand for restoration of the Final Tax Regime was not accommodated in the budget. Fudda said exporters were also concerned over the absence of a mechanism for clearing outstanding sales tax and income tax refunds, amounting to billions of rupees, which remain pending with the Federal Board of Revenue (FBR).
Impact of Delayed Refunds
He added that delayed refunds continue to affect manufacturers’ liquidity and competitiveness in international markets. The SAI president further highlighted what he described as three major unresolved issues facing industry:
- Industrial electricity tariffs that remain higher than those of regional competitors
- The expansion of the Third Schedule of Sales Tax that increases working capital requirements for manufacturers
- A stricter penalty regime that, he said, places additional burdens on compliant businesses
He maintained that the formal industrial sector continues to face challenges, including higher taxes, expensive energy, and delayed refunds while competing in global markets.
Call for Government Action
Fudda urged the government to address these concerns through amendments to the Finance Bill before its approval by the National Assembly and the start of the new fiscal year.
