LAHORE: The All Pakistan Textile Mills Association (APTMA) has called upon Punjab Chief Minister Maryam Nawaz Sharif to immediately suspend the implementation of the 0.90 per cent Punjab Infrastructure Development Cess on industrial imports, warning that the levy could expose manufacturers to double taxation, increase production costs and further undermine the competitiveness of Pakistan’s export-oriented textile industry.
In a letter dated October 9, 2026, APTMA Chairman Asad Shafi expressed strong reservations over the implementation of the provincial levy on imports carrying a Punjab address, irrespective of the province or customs station through which the consignments are cleared.
The industry’s objections follow an October 1 announcement by Pakistan Single Window (PSW), detailing the implementation of the Punjab Infrastructure Development Cess under the Punjab Infrastructure Development Cess (Amendment) Act, 2026.
The controversy has brought renewed attention to interprovincial taxation, the cost of doing business and the financial burden confronting manufacturers operating in Pakistan’s largest provincial economy.
Punjab Address Now Determines Tax Liability
According to the PSW announcement, the amended legislation, stated to be effective from February 25, 2026, provides for an infrastructure development cess of 0.90 per cent on goods manufactured, produced, consumed, imported into or exported out of Punjab.
Crucially, the amended provisions extend the application of the cess beyond the physical location of customs clearance.
Under the mechanism communicated by PSW, a Goods Declaration (GD) or Single Declaration (SD) may be treated as an import into Punjab where the address declared in the document is situated in the province or where the registered business address of the importer, consignee or owner is located in Punjab.
The cess is consequently determined on qualifying imports using tax-office information available through Federal Board of Revenue (FBR) records, regardless of whether the goods are cleared through customs facilities in Punjab, Sindh or elsewhere.
This means that manufacturers registered in Punjab may become liable for the provincial cess even when their imported consignments enter Pakistan through Karachi’s ports.
PSW has informed traders, importers, exporters and customs agents that the Punjab Revenue Authority (PRA), integrated with the PSW platform as an Other Government Agency, is connected to the digital system for implementing its cross-border trade requirements.
The announcement further states that the system is being updated to incorporate the amended legislative requirements and facilitate digital collection of the cess.
Importers and other stakeholders have also been advised to ensure that their registration details with the FBR are accurate and updated to enable correct assessment and collection.
Double Taxation: The Central Industry Objection
APTMA’s principal objection concerns the potential imposition of two provincial infrastructure levies on the same imported goods.
According to the association, imports cleared through ports in Sindh are already subject to the Sindh Infrastructure Cess. The subsequent application of Punjab’s 0.90 per cent levy on the same consignments would create an additional tax burden for manufacturers operating in Punjab.
APTMA argues that such a mechanism amounts to double taxation and places Punjab-based manufacturers at a disadvantage compared with industries operating in other provinces.
The association maintains that the additional levy could create fiscal disparities between provinces and discourage industrial investment in Punjab.
The distinction is commercially significant because the majority of Pakistan’s seaborne imports enter through ports located in Sindh, while substantial manufacturing operations, particularly textile production facilities, are concentrated in Punjab.
However, the extent of overlapping taxation on individual consignments would depend on the applicable Sindh levy, the goods concerned and any statutory exemptions.
Additional Rs900,000 On Every Rs100 Million Of Imports
The financial implications of the levy become clearer when measured against the import requirements of large industrial manufacturers.
At a rate of 0.90 per cent, a consignment with an applicable taxable value of Rs100 million would attract an additional Rs900,000 in infrastructure cess.
For an industrial enterprise importing raw materials and equipment with an aggregate taxable value of Rs1 billion, the levy would amount to Rs9 million, assuming the full value is subject to the cess and no exemption applies.
For businesses handling imports worth Rs5 billion annually, the corresponding financial exposure could reach Rs45 million.
These illustrative calculations exclude any separate Sindh infrastructure levy, customs duties, sales tax and other applicable charges.
The potential burden becomes particularly relevant for textile mills that depend on regular imports of cotton, synthetic fibres, dyes, chemicals, spare parts and capital equipment.
The cumulative effect could be especially challenging for businesses operating on narrow margins and facing substantial working capital requirements.
Textile Industry Already Under Pressure
In his communication to the chief minister, Asad Shafi highlighted the difficult operating environment confronting textile manufacturers.
APTMA pointed to high energy tariffs, expensive financing, taxation and weak demand as existing pressures that have already affected the industry’s financial sustainability.
The association argued that introducing another levy on imported industrial inputs would further increase manufacturing costs at a time when exporters are struggling to maintain their position in international markets.
Pakistan’s textile value chain relies on imported inputs at multiple stages, including spinning, weaving, processing, dyeing, finishing and garment manufacturing.
Any additional cost imposed on these inputs can travel through successive stages of production, affecting the final cost of exportable goods.
APTMA warned that higher input costs would reduce profit margins and make it increasingly difficult for exporters to retain international buyers.
The association also cautioned that the levy could undermine investment in modern machinery and technology, both of which are essential for improving productivity and competing internationally.
Export Facilitation Scheme Raises Another Legal Question
The controversy also raises questions about the treatment of industrial inputs imported under Pakistan’s Export Facilitation Scheme (EFS).
APTMA has separately sought clarification and exemption for eligible EFS consignments cleared through Karachi ports, arguing that duty- and tax-exempt export inputs should receive consistent treatment regardless of the customs station used.
The association has cited Section 6 of the Punjab Infrastructure Development Cess Act, 2015, and the relevant provisions of the Export Facilitation Scheme, 2021, in support of its position.
Its argument is that qualifying imports already exempt from federal duties and taxes should not become liable for Punjab’s infrastructure cess merely because they are cleared at Karachi rather than Lahore.
This introduces an additional regulatory question concerning the interaction between provincial infrastructure taxation and federal export facilitation arrangements.
For exporters, inconsistent treatment across customs stations could create uncertainty over import costs, working capital and the pricing of international orders.
Why The Implementation Timeline Matters
Another issue emerging from the PSW announcement concerns the timeline for implementation.
While the communication identifies February 25, 2026, as the effective date of the amended legislation, the operational announcement was circulated on October 1.
This distinction raises questions about the precise date on which the revised collection mechanism became operational, the treatment of consignments cleared during the intervening period and whether any retrospective assessment could arise.
The announcement itself does not establish that retrospective collection will take place.
Nevertheless, clarity over the implementation date, applicable exemptions and treatment of previously cleared consignments will be important for importers assessing their financial liabilities.
The industry is also seeking clarity on whether the digital collection mechanism adequately distinguishes between taxable imports, exempt consignments and goods already subjected to infrastructure levies elsewhere.
Punjab Government Defends Infrastructure Revenue Measures
The Punjab government’s broader position has been that infrastructure development levies are intended to strengthen provincial revenue collection and support infrastructure requirements.
During earlier legislative discussions, provincial officials maintained that the infrastructure cess was not an entirely new tax but part of an existing framework being amended to improve collection and enforcement.
Punjab Parliamentary Affairs Minister Mujtaba Shuja ur Rehman had previously highlighted the difference between infrastructure-related revenue collected in Sindh and Punjab, arguing that the province needed to improve its collection arrangements.
However, APTMA’s latest objections centre on whether the revised collection mechanism imposes an excessive and potentially overlapping burden on industries already paying multiple taxes.
The dispute therefore involves competing policy priorities: the provincial government’s objective of strengthening infrastructure-related revenue and the manufacturing sector’s demand for lower production costs and a more competitive operating environment.
Industrial Investment And Provincial Competitiveness
Beyond the immediate financial implications, APTMA believes the cess could influence longer-term industrial investment decisions.
The association warned that imposing an additional provincial levy on imported raw materials and machinery would create an uneven playing field for businesses operating in different parts of Pakistan.
For manufacturers considering new factories, capacity expansion or investment in advanced production equipment, differences in provincial taxation can become an additional factor in determining investment locations.
APTMA argued that Punjab risks discouraging further industrialisation if manufacturers face higher import-related costs simply because their registered business addresses are located in the province.
The association maintained that this approach conflicts with government objectives of promoting exports, industrial revival and investment.
It also warned that the measure could create serious distortions in interprovincial trade and increase the overall cost of doing business.
APTMA Seeks Immediate Intervention By Maryam Nawaz
In its October 9 letter, APTMA formally requested Chief Minister Maryam Nawaz Sharif to intervene and suspend the implementation of the Punjab Infrastructure Development Cess on industrial imports.
The association also urged that PSW be directed to stop collection of the cess until consultations are held with industry representatives and chambers of commerce.
APTMA Chairman Asad Shafi sought an early meeting with the chief minister to explain the implications of the levy for Punjab’s textile industry and exports of textile and apparel products originating from the province.
The association’s intervention comes at a time when Pakistan’s manufacturing sector faces pressure to improve productivity, attract investment and expand exports despite elevated operating costs.
The dispute has consequently developed into a broader test of how provincial revenue policies can be reconciled with national export competitiveness and industrial growth.
With the revised collection mechanism linked to business registration details rather than solely to the physical point of customs clearance, Punjab’s infrastructure cess has introduced a significant new dimension to the taxation of industrial imports.
The central question now confronting policymakers is whether the additional revenue generated through the levy will justify its potential economic cost to manufacturers, exporters and future industrial investment.
For APTMA, the immediate priority remains clear: suspend collection on industrial imports, address the risk of overlapping provincial levies and consult manufacturers before proceeding with a measure that the association believes could further weaken Punjab’s industrial competitiveness.