FBR shifts refunds processing of non-exporters to old system

KARACHI: The Federal Board of Revenue (FBR) has restarted its old automated sales tax refund system to handle claims of non-export sector in a move to divide load of its newly-launched technology that has been lurching for over a year, sources said on Tuesday.

The FBR allowed the processing of sales tax refund claims of non-export sector and carry-forward through sales tax automated refund repository (STARR) till June 30th.

The processing of refund through STARR was stopped after the launch of fully automated sales tax e-refund (Faster), which was made fully operational with aim to clear the refund claims within 72 hours from July 1 last year.

Since the start of the new system the exporters have been facing various problems in obtaining refunds. The FBR has made major changes in the Faster to ensure the repayment of refunds directly to bank accounts of the exporters.

For allowing sales tax refunds through Starr, the FBR issued an official memo to all the tax offices.

“Faster lacks the capacity to replicate data of more than one tax period or process claims where there is no export,” FBR said in an office order.

An official at the Regional Tax Office Karachi said the Faster was launched to cater all type of refunds and adjustments of input/output tax. However, this system has so far not been able to process all the claims.

Therefore, the FBR allowed the filing of carry-forward based or non-export related refunds through refund claim preparation software at tax offices in STARR or through expeditious refund system up to June 30.

The STARR was introduced at the time of computerisation of the tax system in 2002. The system has certain checks for cross matching supply and purchases of registered taxpayers. However, the system was grossly misused and it resulted in issuance of fake and bogus refunds under zero-rated sales tax regime.

The official said the FBR should be vigilant in allowing processing of the sales tax refunds through the STARR system as taxpayers as well as tax officials may misuse the payments of sales tax refunds.

The official further said in the past huge amounts of sales tax refunds were paid on fake and flying invoices that were processed through STARR and were under litigation at various fora.

Recently, tax offices on the directive of Federal Tax Ombudsman lodged fist information reports against persons involved in bogus sales tax refunds of different years including 2010 to 2013.