KARACHI: Federal Board of Revenue (FBR) has told the legislators that it will not compromise the integrity of automated sales tax refund system despite pressures from various quarters.
The FBR made a presentation before the standing committee of National Assembly on Finance, Revenue and Economic Affairs on Thursday. The officials of Large Taxpayers Unit (LTU) Karachi explained in detail about the newly launched Fully Automated Sales Tax e-Refund (FASTER).
The standing committee had asked the FBR to explain the automated sales tax refund system following hue and cry from the business community that their refunds under the newly launched system were stuck up and they were facing liquidity problems.
The FBR officials informed the standing committee the automated system was fully transparent and all doors had been closed for issuance of refunds on fake and flying invoices.
It was informed that in the last budget the zero rating of sales tax was abolished which was related to five export oriented sectors.
After withdrawal of SRO 1125(I)/2011, the items in the SROs had become subject to normal sales tax at 17 percent on import and local supply.
In this scenario all the inputs of exporters have become taxable which gave rise to refunds and liquidity issues.
However, the government resolved the issue of sales tax refunds of exporters through introduction of FASTER system, which applied from July 01 onwards.
It is informed that data provided in monthly returns is treated as data in support of refund claim and no separate electronic data is required. “The only requirement is filing of Annexure-H with 120 days of the filing of sales tax return.”
After filing, the claim is routed through processing module FASTER. Refund claim data is verified by the system and Refund Payment Order (RPO) of the amount found admissible is generated.
The FBR officials told that RPO was electronically communicated to the State Bank of Pakistan within 72 hours.
The standing committee was informed that refund claims, which were not verified through validation checks, are processed under STARR.
In order to resolve issues related to FASTER system, the FBR deputed focal persons in all field formations. Besides, chief automation and PRAL team is available through cell phones/ helpline to assist taxpayers.
Further, filing date of annexure – H has been extended up to February 15, 2020.
After the launch of FASTER system the issuance of refund payment registered unprecedented growth of 165 percent. According to the briefing the FBR released Rs36.82 billion during July 01- January 21 2019/2020 as compared with Rs13.9 billion in the corresponding period of the last fiscal year.
The issuance of refunds by LTU Karachi registered phenomenal growth of 317 percent to Rs7.89 billion during July 01 – January 21 2019/2020 as compared with Rs1.89 billion in the corresponding period of the last year.
