FBR stops refunds payment as fiscal year near end

KARACHI: The Federal Board of Revenue (FBR) has asked its departments to stop releasing tax refunds, adding to the frustration of businessmen who are already perplexed over the delayed settlement of claims.   

The FBR directed them to stop issuance of tax refunds till the announcement of the federal budget for the next fiscal year of 2016/17.

“All Inland Revenue formations across the country have been advised to stop issuing refunds until the end of the current fiscal year,” an FBR official said on condition of anonymity.

“There has been no formal instruction in this regard, but there is an understanding in the Inland Revenue. Processed claims would be issued in July,” the official said.

The official, however, added that in some cases fraction of the claimed amount will be issued before the budget announcement.

Export rebate, sales tax and income tax refund claims to the tune of tens of billions of rupees have been withheld, causing frustration among the business community.

“At present when exports are stagnant and export-oriented industry is in dire need of resources, delay in refund payment is adding to our miseries,” a business leader said. “The FBR should not hamper the industrial growth by denying the exporters and manufacturers their rights of refund of sales and income taxes.

An industrialist said delay in release of multibillion rupees funds caused serious liquidity crunch for the exporters and manufacturers that might lead to closure of several industrial units.

The official, however, denied that refunds were held to complete the collection target.

“The revenue growth is well on track this year and we are positive about achieving the revenue collection target set for the year,” he added.

The government projected a revenue collection target of Rs3.104 trillion for the current fiscal year, while the FBR collected around Rs2.1 trillion in the first nine months of 2015/16.

The official said last year was quite productive for broadening the tax base and revenue generation as the FBR was able to receive over one million tax returns, which were about 0.750 million three years ago.