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March 31, 2020

Efforts afoot to ‘immediately’ settle small businesses’ refunds

Business

March 31, 2020

KARACHI: Tax offices have expedited efforts to immediately settle pending refunds of small businesses, whose liquidity crunch is aggravating amid lockdown, officials said on Monday.

The officials said the Federal Board of Revenue (FBR) directed tax offices to release income tax refunds on priority basis in order to ensure liquidity for small businesses.

“We have started process of verifying and releasing income tax refund claims on priority basis,” Badaruddin Ahmed Qureshi, chief commissioner of Inland Revenue, Regional Tax Office (RTO)-II Karachi said.

At the end of third quarter of a fiscal year, tax authorities usually engage in maximising revenue collection to achieve targets. However, the situation is quite different this year due to widespread coronavirus and halt of business activities.

FBR collected Rs2.7 trillion during the July-February period of the current fiscal year with revenue shortfall of Rs325 billion. With the existing pace, the annual revenue shortfall might rise to more than Rs700 billion compared to the revised target of Rs5.2 trillion for FY2020.

Tax authorities are not taking harsh action against taxpayers to recover outstanding tax amount. Instead, the tax offices are processing tax refunds to facilitate taxpayers.

Sources said the tax offices including RTOs and large taxpayers units were directed to issue income tax refunds of exporters on priority basis. They further said the taxpayers having claims of up to Rs1 million should also be processed on fast track basis. Besides, refund cases pending before Federal Tax Ombudsman should also be cleared on priority basis.

The sources said around Rs25 billion income tax refunds would be released in next few days. The FBR directed the tax offices to process refund cases of income tax claims and after verification the amount should be sent directly to bank accounts of the claimants.

The sources said the FBR also accelerated the process of issuing sales tax refunds for exporters through fully automated sales tax e-refund system.

The sources said small businesses are facing severe liquidity issues due to lockdown. They said in some cases taxpayers are not able to pay their tax liabilities.

The sources said besides issuing tax refunds for business community, the government would announce relaxation in payment of duty and taxes and extend reasonable time for taxpayers to discharge their liabilities.

Senior tax officials said the business community is sending their proposals regarding payment of duty and tax during coronavirus lockdown. They said businesses are demanding to defer payment of duty and taxes for at least three months in order to provide relief to taxpayers, who already incurred huge financial losses due to business closures.