5pc tax on import of used clothing

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ISLAMABAD: The government has imposed five per cent sales tax on import and local supply of second-hand and worn clothing. A notification SRO657 was released here on Friday by the Federal Board of Revenue to implement the decision immediately. In July-May 2012-13, Pakistan imported 354,895 metric tonnes ($137.315m) of worn clothing—jackets, sweaters, trousers, shirts, overcoat, kids garments falling under PCT heading no 6309.0000 as compared to 370,855 metric tonnes ($136.170m) during the same period in the previous year, showing a 4.30pc decline in terms of quantity.

However, in term of value, a growth of 0.84pc was recorded in the first 11 months of the outgoing fiscal year over the previous year.

The FBR expects to collect an easy sales tax on import stage from worn clothes, which are used mostly by the poor people because of high inflation and expensive locally manufactured clothes.

The imported used clothes of both summer and winter are available in Lunda Bazaars across the country.

For example, the price of a good quality locally produced shirt ranges between Rs800 to Rs5000. This high price compels people to buy substandard quality at low price while consumers try to sort out it in Lunda Bazar at Rs50-200.

It is because of this high price margin, the demand for imported worn clothes have surged in the past few years. The demand is also going up because of rising poverty in the country.