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December 8, 2017

FBR to clear Rs6 billion in five-year-old sales tax refunds


December 8, 2017

KARACHI: Federal Board of Revenue (FBR) decided to clear stuck sales tax refunds of around six billion rupees pending for the last five years because of incomplete documents, officials said on Thursday.

The officials said the FBR will resolve deferred cases for which processing was stopped due to technical reasons, such as non-availability of supporting documents necessary to issue refunds.

Khawaja Tanveer, member of Inland Revenue (Operations) held meetings with representatives of Pakistan Hosiery Manufacturers and Exporters Association and All Pakistan Textile Mills Association to discuss the issue of stuck sales tax refunds.

Officials said FBR agreed to form a committee to resolve the deferred cases. It was also decided that the committee would consider the cases pertaining to the past five years. Exporters and manufacturers were claiming refunds, which were deferred, for the past 25 years.

The revenue body’s online system detected the deferred cases. Tax officials said it was a wrong impression that the officials were deliberately creating hurdles to stop the refunds.

The Corporate Regional Tax Office (CRTO), Karachi said a taxpayer files refund claim through online system. “The online system automatically matches the invoices issued by buyers and sellers and decides to allow, reject or defer the refund claims,” a CRTO official said. The online system defers the cases if invoices are not matched or goods declaration (GD) is not shown in import cases.

“As per law, a tax official having jurisdiction should issue notice to a taxpayer to provide required document for processing the refund case,” the official said. Deferred cases have accumulated during the past few years as tax officials didn’t issue notices on time, industry officials said.

Tanveer assured the business community of allowing access to online system to check the required documents for clearing and further processing the refund cases. He assured the business community of releasing refunds from next week on which refund payment orders (RPOs) have already been approved.

The Federal Board of Revenue had already issued Rs42 billion refunds during the first five months of the current fiscal year as compared to Rs21 billion issued in the corresponding period of the last fiscal year, depicting an increase of 100 percent.

In July, government swung into action to settle all the pending refund claims for which release payment orders were issued. An estimate put such stuck refunds at around Rs50 billion.

Exporters argued that due sales tax refunds and rebate stand at Rs300 billion, while government’s estimate cut it to half. However, government’s response to the refund issue has already given some respite to exporters who ran short of liquidity on account of stuck refunds.

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