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Tag: sales tax refund

  • FBR to issue around Rs3 billion tax refunds in next couple of days: Hafeez Shaikh

    FBR to issue around Rs3 billion tax refunds in next couple of days: Hafeez Shaikh

    ISLAMABAD: Federal Board of Revenue (FBR) will issue another Rs2 to 3 billion tax refunds in next couple of days, Dr. Abdul Hafeez Shaikh, Adviser to the Prime Minister on Finance and Revenue, said on Thursday in a meeting with leading businessmen.

    The adviser told the businessmen that FBR was working very hard to facilitate the exporters and another Rs 2 to 3 billion tax refunds would also be issued within the next couple of days.

    The meeting discussed and reviewed progress on the issues pertaining to payment of Sales Tax refunds to exporters.

    Adviser to Adviser Commerce Ali Habib, Chairman FBR Syed Shabbar Zaidi and Secretary Finance Naveed Kamran Baloch were also present in the meeting which was attended by leading exporters from Lahore and Karachi, including Shahid Soorty, Musaadiq Zulqarnain, Fawad Anwer, Shahid Abdullah, Bashir Ali Mohammad, Rizwan Dewan, Asif Tata, Ahmed Ibrahim, Sameer Chinoy and Khurram Mukhtar.

    During the proposals, various proposals were put forward from the businessmen and exporters and FBR was advised to work more aggressively on reforming and simplifying the processes through automation for early and prompt payment of sales tax refunds.

    He told the businessmen he had already constituted a committee comprising officials from FBR and members of APTMA to simplify the Form-H within the next few days to make it simpler and easy for the exporters claiming sales tax refunds.

    The businessmen were asked to nominate anyone they liked to become part of the Committee as he wanted to ensure a hassle-free submission of tax refund claims and their subsequent payment without any delay.

    The businessmen thanked the Adviser and his team in FBR for ensuring payment of Rs 32 billion sales tax refunds to the exporters in the last couple of days.

  • FBR issues Rs5.5bn refunds through automated system: Shabbar Zaidi

    FBR issues Rs5.5bn refunds through automated system: Shabbar Zaidi

    ISLAMABAD: Syed Shabbar Zaidi, Chairman, Federal Board of Revenue (FBR) on Wednesday said that around Rs5.5 billion sales tax refunds were issued through fully automated system.

    In a massage, he said that the FBR had released to this date around Rs 5.5 billion worth of refunds under fully automated FASTER system.

    “However the most important feature and the change in paradigm is that such refunds have been issued under fully automated, impersonal, harassment and corruption free system.”

    In August 2019 the FBR amended the Sales Tax Rules, 2006 through SRO 918(I)/2019 to make mandatory the routing of refund claims through RMS of the FBR’s computerized system.

    Based on the parameters in RMS, a refund claim shall be routed to any of the following three channels as described below, namely:−

    (a) Fully Automated Sales Tax e-Refund System (FASTER), The provisions related to this channel are prescribed in Chapter V-A.

    (b) Expeditious Refund System (ERS), The claims filed by the manufacturer cum-exporters under section 10 of the Act that do not fulfill parameters of FASTER channel and the same are considered as involving medium risk by RMS shall be routed to ERS. The RPO for verified amount shall be generated and forwarded to CSTRO for payment.

    (c) Sales Tax Automated Refund Repository (STARR), The claims that do not fulfill criteria for both FASTER and ERS channels shall be processed through STARR in the manner as provided in rule 29.

    For the refund claims processed through FASTER or ERS, the part of the refund claim that is not verified or not found admissible shall be subjected to system validation checks every week and Refund Payment Order (RPO) shall be generated for the amount found valid during each validation check. After every validation process, the information regarding RPO generated, if any, as well as the objections shall be communicated by the system to the refund claimant and also to the concerned RTO or LTU for information.

    The FBR said that RPO so generated shall be communicated to the State Bank of Pakistan for payment in the aforesaid manner. After eight validation checks, including the initial one, if any amount still remains un-cleared, the same shall then be processed under STARR channel.

  • Exporters claim Rs62 billion fresh refunds stuck up despite FBR’s 72-hour clearance assurance

    Exporters claim Rs62 billion fresh refunds stuck up despite FBR’s 72-hour clearance assurance

    KARACHI: The new 72-hour sales tax refund clearance strategy of Federal Board of Revenue (FBR) has failed as another Rs62 billion refunds were stuck up since launch of the new systems, exporters said.

    Muhammad Jawed Bilwani, Chairman, Pakistan Apparel Forum in a statement on Friday said that around Rs62 billion of textile exporters liquidity held up with the government under FASTER Refund System in last 4 months, after imposition of 17 percent Sales Tax on Exports.

    Before abolishing SRO 1125 – zero percent sales tax for five export oriented industries –the government committed that sales tax refund claims payments will be paid immediately after submission of GD like Bangladesh Model.

    Contrary to Bangladesh Refund Model, Govt. launched FASTER by which sales tax refunds to be paid within 72 hours electronically. New FASTER system has been failed and FBR processing claims manually and SBP paying refund on advice of FBR.

    He said that huge amount of exporters’ liquidity of billions of rupees in Sales Tax Refund, Custom Rebate, Withholding Tax, DDT and DLTL has been stuck up with the government causing great sufferings to the already burdened exporters who are now at a loss to understand how to make both ends meet and such an alarming situation will ruin the export business of the Value Added Textile Exporters.

    On the demand of exporters, the government has withdrawn Refund Bonds electronically but payments against refund bonds have not been paid yet to the exporters, he informed.

    FBR also claimed that Custom Rebates shall be paid electronically with Export Proceeds as a result of system automation, however, the plan has not been turned into reality but previous backlog of eight months have been increased to twelve months.

    He added that due to financial hardships, Value Added Textile SMEs are not taking new export orders.

    It is pertinent to note that meager increase in the exports of value added textile sector due to previous policies of Government before Budget 2019-20.

    The impact of the policies of current Budget 2019-20 will be arrived in 2020 calendar year. It is a great irony that FBR vide SRO 747(I)/2019 dated 9th July, 2019 has withdrawn the exemption of sales tax and federal excise duty on buying of locally procured input goods by Export Oriented Units under SRO327.

    This Scheme was introduced on the pattern of Export Processing Zone (EPZ) where there is no taxes on buying of locally procured input goods and no taxes on utilities.

    Industries registered in Export Oriented Units (EOU) are liable to export 80% of their annual production. FBR should withdraw amendment to omit the clause 10 sub-section (b) and (c) of the Export Oriented Units and Small and Medium Enterprises Rules, 2008 so that exporters operating under Export Oriented Units can procure input goods without taxes as this is the safest scheme and item-wise individual analysis card is submitted in WEBOC.

    He said that exporters have a gut feeling that FBR with its harsh policies is trying to destroy value added textile export sector which is the largest export sector and labour intensive.

    It is an alarming situation that new comers are not interested in the business of export sector due to harsh incumbent government policies. Our existing Export Industry gets spillover orders from the international buyers and is surviving due to economy of scale and efficiency in the production.

    He demanded that government should clear all pending refund payments of exporters forthwith and restore zero rating (0%) of sales tax – no payment no refund regime in the best interest of exports, economy, foreign exchange earnings, employment etc.

  • ECC approves Rs30bn for redemption of sales tax refund bonds

    ECC approves Rs30bn for redemption of sales tax refund bonds

    ISLAMABAD: The government has approved Rs30 billion for redemption of sales tax refund bonds issued by the Federal Board of Revenue (FBR).

    The Economic Coordination Committee (ECC) of the Senate in a meeting yesterday took up a proposal by FBR and approved a technical supplementary grant to the tune of Rs 30 billion for the redemption of bonds issued by the “FBR Refund Settlement Company Limited” to the tune of Rs 30 billion, and payment of sales tax refunds by FBR in the form of cheques in accordance with the prescribed rules.

    The ECC also approved a proposal by the Commerce Division for declaration of the erstwhile zero-rated sectors, namely Textiles (including jute), carpets, leather, sports and surgical goods as “Export Oriented Sectors, which includes Textiles, Carpets, Leather, Sports and Surgical Goods”.

    On another proposal by the Ministry of Information Technology & Telecommunication for exemption of 8 percent minimum Income Tax for National Telecommunication Corporation, the ECC constituted a body comprising Minister for Economic Affairs Division Muhammad Hammad Azhar, Minister for Information Technology & Telecommunication Khalid Maqbool Siddiqui, Chairman Board of Investment and a representative from FBR to review the proposal and present suitable recommendations to ECC.

  • Properly filled stock statement to ensure refund in 72 hours: FBR

    Properly filled stock statement to ensure refund in 72 hours: FBR

    ISLAMABAD: Federal Board of Revenue (FBR) has said that property filled stock statement will ensure processing of sales tax refunds within 72 hours.

    The FBR said that properly filled Annex-H, which is form to provide details of stock statement, without objections and anomalies of data will ensure processing in 72 hours.

    The FBR said that Annex-H is a stock statement of input goods / services which shows flow of inputs in terms of quantity, value and sales tax involved in opening / closing balances, purchases and consumption in exports and local sales.

    Quantities / values of finished products (exports and local) and output tax on local sales should not be mentioned in Annex-H3-Use Annex H to upload for the month transactions i.e. purchase, import and Consumption only, Opening and Closing are derived /calculated automatically.

    Same is applicable for Excel file uploading otherwise objection of duplicate value will arise.

    The brought forward and carry forward tax amount in the return should match with opening balance and closing balance tax amount in the Annex-H5

    The value of purchases and input tax paid thereon in the return should match with the corresponding figures in columns “purchased / imported during the month” in Annex-H6-Generally, refund amount in column 29 of return is based on following formula:

    Refund claim=Input Tax Consumed in Exports/ Zero Rated(Col 22 of Annex-H)–Net payment against local supplies

    OR

    Refund claim = Input Tax Consumed in Exports/ Zero Rated(Col. 22 of Annex-H)+Input tax consumed in local supplies (Col. 20 of Annex-H)− Accumulated debit from monthly return (Row 17 of return)

    Mark invoice-wise inadmissible input tax for SRO 490 for accuracy in Annex-A of return

    Avoid claiming input tax credit more than once on same GD / invoice (e.g. both in provinces and FBR return)

    Credit brought forward from previous claim will be made available in opening balance in Annex-H.

    Recovery / arrears data will be made available in Annex H Declaration

    Following items relating to toll manufacturing have been added in “Item description” in Annex-H

    a.Sizing

    b.Yarn Dyeing

    c.Yarn Doubling

    d.Weaving

    e.Knitting

    f.Processing (Bleaching, Dyeing and Printing)

    g.Stitching

    h.Embroidery

  • Sales tax refund payment falls by 70 percent in last year

    Sales tax refund payment falls by 70 percent in last year

    ISLAMABAD: Federal Board of Revenue (FBR) has issued only Rs21.16 billion as sales tax refunds during last year which is 70 percent less than the preceding fiscal year.

    According to FBR’s Year Book 2018-2019, the revenue body had issued sales tax refunds amounting to Rs21.16 billion as against Rs70.5 billion in the preceding fiscal year, which recorded 70 percent decline.

    It is worth mentioning that the exporters are criticizing the FBR for holding their amount in the shape of sales tax refunds. The stuck up liquidity has created serious financial challenges to undertake production activity.

    The overall release of refunds and rebate registered 21.4 percent decline during the past fiscal year.

    The FBR issued rebate and refunds worth Rs121.63 billion during fiscal year 2018/2019 as compared with Rs154.72 billion in the preceding fiscal year.

    The issuance of refunds in direct taxes recorded 21 percent growth to Rs83.89 during the last fiscal year as compared with Rs69.46 billion in the preceding fiscal year.

    The FBR issued Rs16.57 billion as customs duty rebate during the last fiscal year, which was 12.3 percent higher than Rs14.75 billion in preceding fiscal year.

  • FBR issues guidelines to facilitate issuance of sales tax refunds in 72 hours

    FBR issues guidelines to facilitate issuance of sales tax refunds in 72 hours

    ISLAMABAD: Federal Board of Revenue (FBR) has issued guidelines to facilitate taxpayers in issuance of sales tax refunds within 72 hours.

    The FBR issued user guidelines for filing Annexure – H i.e. details of stock position of sales tax registered persons. This annexure is mandatory for refund claimants and they may submit statement within 120 days from due date of return filing of particular tax period; other registered persons are encouraged to provide these details, the FBR said.

    The FBR advised the sales tax registered persons to use Annexure – H to upload transactions for the month i.e. purchase, import and consumption only.

    Opening and closing balances are derived/calculated automatically. Same is with Excel uploading otherwise objection of duplicate value will arise.

    The FBR said that opening and closing balance in sales tax return must match with Annexure – H.

    It is further advised to sales tax registered persons to use Annexure – H column consumed / exported during the month (domestic zero rated / export for amount of refund on export mentioned in return (minus tax on local supplies).

    The FBR advised the sales tax registered persons to use column consumed / sold during the month (domestic taxable supplies) for consumption against domestic supplies in relation to output tax declared in return.

    Mark invoice wise inadmissible input tax in Annexure – A relating to SRO 490. Do not attach / claim GD of imports or/and exports that have already been claimed or not relevant.

    The FBR said that credit brought forward from previous claim will automatically be available in Annexure – H.

    The FBR added new items in list of items: sizing, yarn dyeing, yarn doubling, weaving, knitting, processing (bleaching, dyeing and printing), stitching, embroidery.

    The FBR said that RCPC for refund preparation system has been replaced with Annexure – H for all types of sales tax refund claims from July 2019 onward.

    Properly filled Annexure – H without objections and anomalies of data will ensure processing in 72 hours.

  • Post refund divisions to be set up at RTOs/LTUs to audit claims

    Post refund divisions to be set up at RTOs/LTUs to audit claims

    ISLAMABAD: Federal Board of Revenue (FBR) has decided to audit sales tax refunds by establishing ‘refund division’ at all Regional Tax Offices (RTOs) and Large Taxpayers Units (LTUs).

    According to amended Sales Tax Rules, 2006 issued by the FBR the Rule 27 has been amended to establish Centralized Sales Tax Refund Office (CSTRO), Refund Division and posting of officers.

    The FBR said that a CSTRO would be established under the Board for centralized payment of all refund amounts as due under the Act.

    Further a Refund Division will be established, which will be headed by an officer, not below the rank of Assistant Commissioner, herein after referred to as officer-in-charge, duly supported by audit staff referred to as processing officers, to examine, process and settle the refund claims filed under these rules.

    Further Post Refund Division in each RTO or LTU shall be established, which will be headed by an officer not below the rank of an Assistant Commissioner to audit the refund claims processed and sanctioned by the Refund Division.

    The FBR said that that scrutiny of the refund claims processed or sanctioned after the June 30, 2014 shall be carried out on the basis of risk-based selection through computerized Post Refund Scrutiny (PRS):

    Provided that where the Commissioner Inland Revenue has reasons to believe that a registered person, whose refund claim was processed or sanctioned, has been paid refund which was not admissible to him, he may direct through order in writing to conduct computerized Post Refund Scrutiny (PRS) of such claim.

    Post refund audit of refund claims process through RMS will be the responsibility of the audit Divisions of respective RTO/LTU.

    The registered person claiming refund under these rules shall maintain and keep all the paper documents relating to the refund claim, such as invoices, credit notes, debit notes, goods declarations, bank credit advice, etc. in his office.

  • Sale tax refunds to be released on declared stock statement: FBR

    Sale tax refunds to be released on declared stock statement: FBR

    ISLAMABAD: Federal Board of Revenue (FBR) on Monday said that refunds will be issued only on stock statement declared by sales tax registered persons.

    The FBR issued Sales Tax Circular No. 04 of 2019 to explain the issuance of refund payment under FASTER refund module.

    The FBR said that refund will be processed on the basis of entries in Annex-H.

    Annexure H is a stock statement declared by a registered taxpayer through his return.

    According to the FBR this annexure is mandatory for refund claimants and they may submit this statement within 120 days from due date of return filing of particular tax period; other registered persons are encouraged to provide these details.

    The system will show and fill the relevant columns of those items whose closing balance will be greater than zero in proceeding return, but the registered person may add the new items and provide their data manually. The column wise filing details are as follows:

    This annexure will be mandatory for refund claimants who will claim any amount of refund at serial 30 of main return and they may submit this statement within 120 days from due date of return filing of particular tax period.

    In the latest circular No. 4, the FBR said that in wake of rescission of SRO 1125(I)/2011, it had committed with the exporters of the export oriented sectors i.e. textiles, leather, carpets, sports goods and surgical goods, that refunds shall be paid within 72 hours of filing of refund claim.

    For this purpose, FASTER refund module has been developed, which will process claims of exporters of five export-oriented sectors for the tax period July, 2019, and onwards.

    FBR has earlier clarified that submission of Annex-H, which is a form in the monthly sales tax return, shall be treated as submission of refund claim.

    It is added that the number of refund claims received is not significant. The exporters are facing some difficulties in filing of their tax refund claims (Annex-H) under FASTER. Many claimants have approached the Board with request that they may be allowed revision of their return on the ground that the entries made in Annex-F do not match with those in Annex-H.

    It is accordingly clarified that refund is processed on the basis of entries in Annex-H. The entries in Annex-F have no bearing on refund claim except that carry forward of value addition tax is excluded from refund amount.

    Accordingly, the claimants are advised not to revise the returns on the ground that entries in Annex-F do not match with those in Annex-H.

    They should submit Annex-H, if not already submitted so that their claims can be processed.

    Further, field formations are advised not to draw an adverse inference if the Annex-F does not match with Annex-H in case of monthly returns already submitted.

  • SBP urged to direct banks for accepting sales tax refund bonds

    SBP urged to direct banks for accepting sales tax refund bonds

    KARACHI: The business community has urged State Bank of Pakistan (SBP) to issue directives to banks for accepting sales tax refund bonds in order to ease hardship in liquidity issues, especially for the exports.

    Karachi Chamber of Commerce and Industry (KCCI) in this regard wrote a letter to SBP Governor Reza Baqir and apprised him about the government papers, which were issued by the Federal Board of Revenue (FBR) against the stuck up refunds, but despite inclusion in the Sales Tax Act, 1990 the banks were not accepting those.

    Agha Shahab Ahmed Khan, President, KCCI in the letter said that due to liquidity crunch the exporters had no option but to curtail their production and were trying to maintain their share in the existing international market.

    “The situation has worsened to such an extent that our exporters simply cannot explore any new market to raise the exports due to lack of funds which, if not timely addressed, is likely to have a negative impact on Pakistan’s economy which is already under immense pressure and is struggling hard to narrow the current account deficit.”

    He said that the Federal Board of Revenue (FBR) has issued Bonds to the claimants and as per provisions of section 67-A of the Sales Tax Act-1990, these bonds shall be traded freely in the Country’s secondary markets and they will be accepted by the banks as Collateral.

    “However, despite specific directions in the relevant Act, these bonds are neither being traded freely in the market nor being accepted by the banks, creating severe liquidity problems for the exporters who are unable to finish their export orders, hence the situation was likely to shrink the overall exports and may also result in further depreciation of the desperately Foreign Exchange reserves of the country which requires Governor State Bank’s indulgence.”

    He stressed that the State Bank has to ensure compliance of the statutory provisions as soon as possible. “Almost a month has passed so far but no relief has been provided to minimize the grievances being faced by the exporters.”

    He was of the opinion that the exporters were already going through the toughest time due to ‘Creative Destruction’ which has made many Pakistani products obsolete in the international markets whereas they are terribly suffering due to high cost of doing business, stagnant industrial activities, the highest ever inflation and many other issues particularly the stuck up refund claims that needs to be resolved and the claimants must get their legitimate refunds on top priority.