FBR to form committee to expedite sales tax refund claims

KARACHI: Federal Board of Revenue (FBR) said it will set up a committee with representatives from the business community and its own officials to expedite sales tax refunds, discuss other taxation issues and review policy changes on a monthly basis.

FBR Chairman Malik Amjed Zubair Tiwana announced that a perpetual committee comprising three representatives of Karachi Chamber of Commerce and Industry (KCCI) and three chief commissioners of FBR would be formed.

During his visit to KCCI, the chairman informed that refund payment orders (RPOs) against all refund claims till July 10, 2023 have already been issued. However, refund claims of more than Rs100 billion have been deferred by the system, which would be reviewed by the FBR-KCCI joint committee so that the process for issuing RPOs for such refund claims could be expedited.

FBR chairman further stated that on an average, refund claims of Rs1 billion generate every day under the automated system, which meant FBR issues refunds of up to Rs30 billion every month. But he admitted that the process was delayed in the recent past due to some system malfunctioning.

Tiwana said that there was no human involvement at all at any stage in processing refund claims, but when the system defers any refund claim, it is forwarded to field formations who seek necessary documentation to finalise the precise refund amount claimed.

He informed that the FBR has declared this year as the year of ‘sales tax fraud detection’ and actions have been initiated against those absconders who have taken money from manufacturers against supplies but haven’t submitted their outstanding taxes.

In response to concerns expressed over customs rebates, the chairman formed another committee to address the issues relating to Customs especially the revision of fixed rebate rates. In this regard, Chief Collector of Customs Karachi was nominated as members of the committee by the FBR chairman.

Commenting on the DLTL issue, he said that although there was no provision for DLTL in the current budget, the FBR will look into the possibility of arranging funds for DLTL by making adjustments in other heads so that the taxpayers’ liquidity problem could be reduced to some extent.

He said that all the administrative issues highlighted by KCCI would be promptly resolved, but the policy related issues could only be taken into consideration in next year’s budget.

While appreciating Tiwana’s announcement to form a committee, BMG Chairman Zubair Motiwala nominated BMG Vice Chairman Haroon Farooki and Jawed Bilwani and KCCI Vice President Mohammed Haris Agar as members of the committee. “I hope that with the formation of this crucial committee, the refund process would pick up some pace,” he added. He pointed out that sales tax refund cases mostly comprise of deferred payments, blacklisting or discrepancies which were the biggest hurdle in way of smooth issuance of refund claims. “Although the FBR claims of having refund claims of around Rs39.4 billion, these were probably clean refund cases only as the overall refund claims must be somewhere around Rs150 billion if all refund cases including those subjected to blacklisting, discrepancies or any other minor issue are also included,” he added.