Govt to release Rs50 billion stuck up refunds next week

On August 23, 2016

KARACHI: The government has decided to disburse Rs50 billion worth of refunds to the exporters on 23 August – an amount which is one-fourth of the total outstanding amount, industry sources said on Saturday.

The sources said the government is finally fulfilling its commitment regarding the payment of stuck refunds of exporters and in this connection a ceremony will be held in Islamabad on August 23 to release Rs50 billion.

Leading exporters and manufacturers received invitations for the event. The government is inviting about 100 exporters and manufacturers for the event, according to the sources.

The source said the FBR has prepared refund cheques, amounting Rs70 billion for the disbursement and for this documentations are under the process. An industrialist said the FBR is disbursing sales tax refunds only against those cases that have been verified up to April 30.

“All the pending sales tax refunds till April 30, whose refund payment orders (RPOs) have been approved, will be paid by August 31,” Finance Minister Ishaq Dar said in his budget speech for the fiscal 2016/17.

The sources said the FBR, due to capacity problems, will be unable to clear the entire amount till the cut-off date. “However, it promised to clear the pendency in sales tax by early September,” said an industrialist.

The total outstanding refunds, under all the heads, including sales tax, income tax and duty drawback, was estimated at Rs201 billion.

The refunds have been accumulated after eliminating zero-rating of sales tax for the export and textile sectors. The business community, for the past two years, has been urging the government to re-introduce zero-rating for the export sector, as the industry is facing serious liquidity crunch.

They said delay in release of multibillion rupees funds caused serious fund shortages for the exporters and manufacturers that might lead to closure of several industrial units.

The government previously also planned to issue a financial instrument to settle the tax refund issue. But it failed to materialize its plan issue negotiable instruments.

Businessmen also said refund payment orders (RPO) had been issued around a year back in various cases. Yet, the FBR is not paying attention to the situation. According to a law, once RPO is issued, the FBR is bound to issue payment in seven days.

Therefore, the government, in the latest budget, announced mechanism of ‘no-payment, no-refund’ for the five export sectors in order to avoid creation of refund claims.

APP adds: The government on Saturday decided that the refund payment orders issued till April 30 would be finalized by August 23. The decision was taken during a meeting chaired by the Federal Minister for Finance Senator Mohammad Ishaq Dar.

The meeting with Federal Board of Revenue was convened to review the process for sales tax refunds promised in budget 2016. Special Assistant to Prime Minister on Revenue Haroon Akhtar and Chairman FBR discussed with the Minister the current position of the sales tax refunds and their breakup in different sectors.

It was also decided that the refund payment orders issued up to June 30 June 2016 would be considered and finalized later.

On the occasion the Finance Minister directed that every effort should be made to facilitate the business community including exporters.

He expressed the hope that finalisation of sales tax refunds would help in increasing the business activity in the country.

The meeting was also attended by senior officials of Federal Board of Revenue and Ministry of Finance.