RTO Hyderabad and the Pakistan Cotton Ginners Association have agreed to use verified industry data to determine recovery ratios, market rates and tax liabilities for the cotton ginning and oil milling sector.
The Regional Tax Office (RTO) Hyderabad and the Pakistan Cotton Ginners Association (PCGA) have agreed to pursue an evidence-based and voluntary approach to tax assessment for the cotton ginning and oil milling sector.
The agreement was reached during a meeting at the office of Chief Commissioner RTO Hyderabad Sajjad Akbar, attended by senior tax officials, PCGA Vice Chairman Ramesh Kumar, former chairman Dr Jassu Mal Tleemani and other representatives of the association.
Officials said RTO Hyderabad aims to resolve tax matters through engagement and voluntary compliance wherever possible, rather than litigation or penal action, while ensuring that legally due taxes are properly assessed and paid under the Sales Tax Act, 1990 and other applicable laws.
Recovery Ratios Under Review
The meeting focused on production and recovery ratios in cotton ginning and oil milling, as well as prevailing market prices for lint, cottonseed, cottonseed oil, oil cake and oil dirt for tax years 2025 to 2027.
Among the issues discussed were the department’s proposed 41% lint recovery and 55% cottonseed recovery ratios, along with the quantity of cottonseed available for crushing.
Participants also examined the appropriate oil recovery ratio, with the department considering 4.5% against the approximately 2–3% declared by cotton ginners. The proposed oil cake recovery ratio of 85%, compared with the industry’s declared level of around 80%, and a 2% oil dirt recovery ratio were also discussed.
The participants agreed that factors such as cotton variety and quality, moisture levels, trash content, machinery, processing technology, operational practices and regional market conditions should be considered when determining recovery rates.
PCGA to Provide Industry Data
PCGA representatives acknowledged their responsibility to pay taxes lawfully due under applicable legislation and agreed to provide available national and regional industry data on recovery ratios and market prices.
RTO Hyderabad will examine the information and hold further consultations with industry representatives before determining the relevant parameters for tax assessment and sales tax compliance.
Chief Commissioner Sajjad Akbar assured the association that the tax office would follow a fair, transparent and reasonable approach based on verifiable evidence and the applicable legal framework.
Both sides agreed that the next meeting will be held on Sept 30, 2026, at 2pm, where the matter will be considered further and potentially finalised.
The meeting concluded with both parties reaffirming their commitment to cooperation, transparency, voluntary compliance and the lawful determination of tax liabilities.