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Tag: sales tax refund

  • All sales tax refund claims to be processed through risk management system

    All sales tax refund claims to be processed through risk management system

    ISLAMABAD: Federal Board of Revenue (FBR) has said that every refund claim of sales tax refund shall be processed through Risk Management System of the FBR’s computerized system.

    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.

  • Sales Tax Act 1990: Invoice issued by suspended taxpayers not to be entertained for refund, input adjustment

    Sales Tax Act 1990: Invoice issued by suspended taxpayers not to be entertained for refund, input adjustment

    KARACHI: Any invoice issued by a person, who is suspended or black listed by tax authorities, may not be acceptable for refund claim or input adjustment by another registered person.

    According to updated Sales Tax Act, 1990 issued by Federal Board of Revenue (FBR), the Section 21 of the Act explained the de-registration, blacklisting and suspension of sales tax registration.

    Section 21: De-registration, blacklisting and suspension of registration.

    Sub-Section (1): The Board (FBR) or any officer, authorized in this behalf, may subject to the rules, de-register a registered person or such class of registered persons not required to be registered under this Act.

    Sub-Section (2): Notwithstanding anything contained in this Act, in cases where the Commissioner is satisfied that a registered person is found to have issued fake invoices or has otherwise committed tax fraud, he may blacklist such person or suspend his registration in accordance with such procedure as the Board may by notification in the official Gazette, prescribe.

    Sub-Section (3): During the period of suspension of registration, the invoices issued by such person shall not be entertained for the purposes of sales Tax refund or input tax credit, and once such person is black listed, the refund or input tax credit claimed against the invoices issued by him, whether prior or after such black listing, shall be rejected through a self-speaking appealable order and after affording an opportunity of being heard to such person.

    Sub-Section (4): Notwithstanding anything contained in this Act, where the Board, the concerned Commissioner or any officer authorized by the Board in this behalf has reasons to believe that a registered person is engaged in issuing fake or flying invoices, claiming fraudulent input tax or refunds, does not physically exist or conduct actual business, or is committing any other fraudulent activity, the Board, concerned Commissioner or such Officer may after recording reasons in writing, block the refunds or input tax adjustments of such person and direct the concerned Commissioner having jurisdiction for further investigation and appropriate legal action.

  • Increase in refund claims by registered persons selected for audit

    Increase in refund claims by registered persons selected for audit

    KARACHI: Federal Board of Revenue (FBR) has selected sales tax audit of those sales tax registered persons whose refund claims increased in a month over the corresponding month last year.

    According to risk parameters for selection of audit under Audit Policy 2018, the FBR selected audit cases through computerized balloting of those registered persons whose refund claim increase during a month over the corresponding month last year.

    The FBR also randomly selected those cases where decline in value of supplies as compared to corresponding months of previous year.

    Besides consistent increase in input tax/output tax ratio over corresponding months of previous three years were also selected through random balloting.

    Other risk parameters are included:

    Decrease in taxable supplies to total supplies ratio as compared to corresponding months of previous year.

    Difference in declared value of sales as compared to declared turnover in Income Tax Return.

    Persons declaring reduced rate sales.

    Manufactures showing inadequate value addition.

    Declared sales are less than imports

    Decrease in payment of tax as compared to corresponding months of previous year.

    Increase in refund claimed as compared to corresponding months of previous year.

    Unclaimed purchase to declared purchases ratio is high.

    Utilities to sales ratio is high.

    Discrepancy identified by CREST.

  • FBR to issue sales, income tax refund bonds

    FBR to issue sales, income tax refund bonds

    ISLAMABAD: Federal Board of Revenue (FBR) will issue sales tax and income tax refund bonds through its subsidiary company ‘FBR Refund Settlement Company (Private) Limited.

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  • FPCCI laments delay in releasing refunds, duty drawback

    FPCCI laments delay in releasing refunds, duty drawback

    KARACHI: Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has lamented delay in issuance of refunds and duty drawback to exporters.

    Engr. Daroo Khan Achakzai, FPCCI, President in a statement on Thursday urged the Finance Minister Asad Umar to release the exports sector’s overall outstanding refund claims including deferred claims; Customs Duty Drawback; DLTL etc., which have been lying pending for payment since long.

    FPCCI Chief recalled that he, during the Finance Minister’s Pre-Budget visit to FPCCI Head Office Karachi on January 12, 2019 and thereafter on his post budget visit to FPCCI Regional Office Lahore had stressed the need for an early clearance of back-log of refund claims and automatic payment within the stipulated time limit as the inordinate delay had made the exporters to suffer from liquidity crunch in meeting future export orders well in time.

    While referring to the Finance Supplementary (2nd Amendment) Bill, 2019 regarding issuance of Promissory Notes to exporters on annual profit of 10 percent with maturity period of 3 years for stuck-up refunds, he lamented: “There is a very slow progress in processing of the pending Sales Tax refunds and issuance of RPOs.”

    He wanted that all types of refunds including DLTL, Income Tax etc, should also be included in the Promissory Note Scheme to help the exporters to overcome financial crunch and ensure availability of working capital.

    He proposed that the Government may dole out funds – like for revival of PIA, Pakistan Steel Mills etc., – for clearance of stuck-up refunds, one time full-fledged.

  • Sales tax refunds: 3-year promissory notes to bear 10 percent annual profit

    Sales tax refunds: 3-year promissory notes to bear 10 percent annual profit

    Obtaining Sales tax refunds has been made easy as the government decided to issue 3-year promissory notes to bear 10 percent annual profit.

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