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FBR speeds up sales tax refund process to facilitate exporters

FBR speeds up sales tax refund process to facilitate exporters

ISLAMABAD: The Federal Board of Revenue has enhanced efforts of  making early payment of sales tax refund to facilitate the exporters as well as to enhance exports.

Following the directions of the Finance Ministry, FBR has taken initiatives to liquidate sales tax refund claims including, 22000 small refund claims up to Rs one million were cleared in one go in April as well as refund of Rs 10.187 billion was paid to textile sector claimants in September 2014,”  a highly-placed official of FBR told this scribe here on Tuesday, saying that during the first four months of the current year Rs 20 billion had been paid as compared to Rs 14 billion during the corresponding period last year.
According to a careful estimat,e Sales Tax refund worth Rs 500 billion are pending with the FBR and delayed payment of sales tax refund has been termed as one of main hurdle in enhancing the volume of Pakistani exports because entire investment of small exporter and trader is blocked with the FBR, making him unable to make any further trading.
The official said that to address the reservations of exporters and traders regarding delayed payment of sales tax refund, FBR had taken input of the five export-oriented sectors; textile, leather, sports goods, surgical goods and carpets have been subjected to reduced rate of 2% (fabrics 3%) under an SRO so that refund situation is avoided, minimized to increase liquidity of exporters.
“An expeditious refund system has been developed and claims of meeting  the designated criteria has processed through ERS and admissible amounts is sanctioned within 24 hours,” the official added, saying that cases not satisfying the criteria set for ERS were deferred for alternative process whereby the supporting documents were submitted in  respective office. Claim is processed and sanctioned electronically for the amount that is found admissible. Moreover, the official said that Centralized Sales Tax Refund Office (CSTRO) had been established at FBR for refund cheque issuance in order to ensure transparency and proper queue management and refund cheques were dispatched through couriers to the claimant.

The official said that FBR faced dual challenges of making expeditious sales tax refund payments to exporters while trying to sift genuine refund claims there were always some unscrupulous elements trying to defraud the government exchequer. “Therefore, the official said that to achieve these competing objectives FBR has to rely substantively on electronic processing and security of claims” the official added.