Exporters perturb over part of tax refund claims disallowed without reason

KARACHI: Pakistan Hosiery Manufacturers Association (PHMA) on Friday pointed out reduction in refund amount against original claim.

The PHMA in a letter sent to Ms. Seema Shakil, Member Inland Revenue (Operations), Federal Board Revenue (FBR), informed that it is regretfully informed that against the 100 percent claimed sales tax refunds amount, FBR has cleared 60 percent to 80 percent of 100 percent refund amount and the exporters are unaware why the FBR had withhold the remaining refund amount which has created unrest and spread dissatisfaction among our member exporters.

With utmost concern we want to learn as to why 100 percent payment of Sales Tax Refund is not made and why some part payment has been deferred / withheld without informing any reason.

Kindly look into this matter and inform us how to check the reason of withhold amount against sales tax refund claims in Annexure H under FASTER.

Upon review of the outcome of the refund claims and feedback of our individual members through their professional team we have observed that rejection of the refund claim is largely attributed to the objection of “Risky” and “No amount is admissible for refund”.

These objections by and large are issuing to refund claimants having a substantial amount of carried forward in their sales tax return and RMS particularly in the month of Jun 2019 but not appearing in RPO of the Jun 2019. You may appreciate in the past electronically rejected claims were processed by local RTO and subsequently RPO’s were generated with lapse of considerable time by processing officer.

The carry forward amount in those RPOs are though appearing in RMS but due to skip of sequence the same were not incorporated in subsequent months electronic claims and therefore the carry forward amount in electronically issued RPO of Jun 2019 is not tallied with sales tax return or carried forward amount available in RMS.

You are therefore requested to kindly look into the matter and issue the necessary instructions for incorporating verified carried forward amount appearing in RMS into FASTER and reprocess such refund claims which were rejected due to this technical constraint.

Objections namely “Risky” and “No amount is admissible for refund” are not understandable, since all the Purchases are made from registered supplier & exporters for export purposes. Why would system not refund a Single Penny.

Some of the exporters in the first month i.e. July 2019 has opted to carry forward the excess input tax. According to the refund rules the annex ‘H’ is only requires to be filed by person claiming refund.

The question arises if the annex ‘H’ is not filed by the person opted for carry forward in accordance with the refund rules, how could their carried forward amount be transferred into the brought forward value of next month in the absence of this figure in their RPO of July 2019?

How it is possible that one month claim is approved by the FASTER and the very next month claim is rejected by the FASTER without giving any reason. Therefore, FASTER should be equipped to define the reason of rejection. “Risky” and “No amount is admissible for refund.

It has been observed the FASTER system runs once a month due to which large number of claims are rejected. It is proposed that FASTER system should run preferably once a week to avoid rejection of large number of claims.

The time limit of 120 days for filing of Annex ‘H’ in this background is also needs to be extended. It is proposed to extended time limit for at-least another 60days for submission of Annex ‘H’ for the months of July, 2019 and August, 2019, so that genuine amount of refund claims due to this shift of regime and technical problems should not be lapsed.

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