RTO Hyderabad, PCGA agree on voluntary tax assessment for ginners and oil millers

The Regional Tax Office (RTO) Hyderabad and the Pakistan Cotton Ginners Association (PCGA) have agreed to work together on voluntary tax compliance and the assessment of sales tax liabilities for cotton ginners and oil millers.

 

The agreement was reached during a meeting between RTO Hyderabad Chief Commissioner Sajjad Akbar, senior tax officials and representatives of the PCGA.

 

The meeting focused on resolving tax matters through cooperation and voluntary compliance instead of litigation, where permitted under tax laws.

 

Participants discussed cotton ginning production and recovery ratios, as well as market prices of lint, cottonseed, cottonseed oil, oil cake and oil dirt for tax years 2025–2027.

 

Key issues included the recovery ratios used to determine taxable production. These included the department’s proposed 41% lint recovery and 55% cottonseed recovery, compared with the actual quantities reported by ginners.

 

The participants also discussed an oil recovery rate of 4.5%, compared with the 2–3% reported by ginners, as well as an oil cake recovery rate of 85% against the approximately 80% declared by the industry. A 2% recovery rate for oil dirt was also discussed.

 

The meeting noted that recovery rates can vary depending on cotton variety and quality, moisture levels, machinery, processing technology and operating practices.

 

PCGA representatives acknowledged their responsibility to pay all taxes legally due under the Sales Tax Act, 1990 and other applicable laws. They also agreed to accept reasonable average market prices based on national and regional industry conditions, subject to verification of relevant records.

 

Both sides agreed that tax assessments should be based on reliable and verifiable industry data, while taking into account regional differences and variations in production and processing.

 

RTO Hyderabad assured the PCGA that it would follow a fair, transparent and evidence-based approach when determining recovery ratios, taxable production and sales tax liabilities.

 

The PCGA agreed to provide national and regional data on recovery rates and prevailing market prices. The tax department will review the data before further discussions on the relevant assessment parameters.

 

The matter will be discussed again at the next meeting scheduled for September 30, where the parameters may be further considered and finalised.

 

Both sides said they would continue working toward voluntary compliance, proper payment of taxes and greater transparency in the cotton ginning and oil milling sectors.