Accumulated customs duty drawback refund claims swell to Rs300 bn

ISLAMABAD: The accumulated customs duty drawback refund claims have soared to approximately Rs300 billion out of which the government has promised to pay Rs10 billion in 30 days.

While referring to the meeting of textile business leaders with financial managers of the government held on December 3, 2019, a senior official at Finance Ministry said that huge amount of Rs300 billion of the exporters in the head of custom duty drawback is stuck with FBR and in the meeting held on December, textile industry was assured that out of Rs300 billion, the claims of Rs10 billion would be cleared in 30 days.

In the December 3 meeting the government was represented by Dr Hafeez Shaikh, Adviser to PM on Finance and Revenue, Abdul Razak Dawood Advisor to the Prime Minister on Commerce & Textile, Jahangir Khan Tareen, Dr Ishrat Hussain, Advisor to the Prime Minister on Institutional reforms , Shaukat Tareen, Member Finance & Economic Committee, Naveed Kamran Baloch, Federal Secretary, Ministry of Finance, Shabbar Zaidi, Chairman Federal Board of Revenue and Dr Hamid Ateeq Sarwar, Member Policy IR, FBR

Shahid Sattar, Executive Director All Pakistan Textile Mills Association said that the government has collected sales tax from Textile exporters amounting to Rs55 billion in first quarter out of that FBR has paid back Rs5.5 billion as refunds. However, in first 5 months the tax collecting authority has collected Rs100 billion from the exporters. The huge amount of Rs100 billion is held with FBR in first five months of current fiscal 2019-20 and the exporters want the speedy refunds to cope with the liquidity crisis textile industry is facing since long. Because of want of the liquidity, the exporters are unable to meet their export orders.

Even given the grave situation, Pakistan exports went up by 9.6% in November and imports plunge by 17.53%. The Export and Industrialisation momentum has developed after 10 years but it needs the consistent policies to double exports in 5 years from $24 billion to $50 billion but to achieve the target of $50 billion, exports industry needs the energy package for next five years, speedy payment of refunds to avoid the liquidity crisis and long term financing facility.

Shahid Sattar, however, said that in the said meeting it was decided that HS codes editing rights will be given to exporters which is a good omen. To a question he said that Rs30 billion disbursement against bonds, refund cheques have been dispatched to exporters on December 4, 2019. And similarly Rs2 billion against RPO’s of 6th September 2019 has been disbursed on December 4, 2019.

He mentioned that the December 3 meeting also decided to remove the restriction under which exporters cannot file refund claim until the previous month refund claim is processed by faster system since opening balance is fetched by system automatically. Now under new scenarios, exporters can file their claims at once.

He said that restriction in Annex-H for HS Code, Unit of measurement (UOM) and rate of tax, first four columns will be removed. And threshold of export sales is to be revised to maximum level so that exporters refund is not deferred unnecessarily. And more importantly, threshold for the month of August and September will be revised to 8%, refund claims already processed will be replicated.