FBR asked to address ‘undue delays’ in sales tax refunds

Exporters demand restoration of zero-rated regime, as 'textile sector is facing serious cash flow issues'

LAHORE: Amid serious cash flows issues being faced by the textile sector on account of delays in sales tax refunds from the Federal Board of Revenue (FBR) since July 2019, the All Pakistan Textile Mills Association (APTMA) on Wednesday wrote a letter to acting FBR Chairman Nausheen Javaid Amjad, complaining about “undue delays” in the release of refunds.

“As informed earlier, FBR’s digital refund system – ‘Faster’ (Fully Automated Sales Tax e-Refund), is not working for the past few days due to a series of snags and inherent problems, including non-provision of section 8B of the Sales Tax, Act 1990 in Annexure H (a summary of stock i.e. details of opening, closing stock, stock sold or consumed etc. which is mandatory for refund claimants),” APTMA Executive Director Raza Baqar wrote in the letter.

He said the grievances of registered persons regarding section 8B had already been raised on several occasions and that the board, acknowledging the error in the software, has repeatedly been committing to reform the software to provide for the missing links, including provisions relating to section 8B.

“It is regretted that despite repeated reminders and oral assurances by the board, the needful has not yet been done and the very important aspects, especially regarding the section 8B, have not yet been incorporated in the system,” the letter read.

Baqir mentioned that the above inaction on part of the concerned officials was playing havoc with the system, making it impossible for the exporters to file the requisite Annexure H and claim the admissible amount of sales tax refund.

“It has placed the export-oriented sector at a financial standstill, resulting in blockage of billions of rupees and causing a grave financial injury to the genuine exporters, especially the members of APTMA.”

The APTMA executive director requested FBR chief to look into the matter personally and make the requisite corrections regarding Annexure H at the earliest to ensure speedy processing of refund claims, which were pending for several months.

RESTORATION OF ZERO-RATED REGIME

Adding to what Baqir stated, APTMA Punjab Vice-Chairman Aamir Sheikh said that the government would not be able to achieve its export-led growth targets unless it restores the zero-rated regime for five export sectors.

“When sales tax was imposed on the export sectors, all ministers and advisers had promised the industry that zero-rated will be restored if the government remains unable to release refunds within 72 hours,” Sheikh recalled. “However, nine months have passed now and there has been no positive development in this regard…the zero-rated regime must be restored in the next budget.”

Meanwhile, talking to this scribe, a senior official of Pakistan Textile Exporters Association (PTEA) pointed out that Pakistan was missing out on huge export opportunities due to the serious cash flow issues faced by the textile sector.

He informed that the processing of sales tax refund claims under the ‘Faster’ system has remained halted for the last 22 days.

“More than 50pc of sales tax refunds from July 2019 onwards are still stuck in the refund system…a major amount of refund claims is showing as ‘deferred or missing’,” the PTEA official added.

He maintained that FBR’s e-refund system had failed miserably to timely process sales tax refund claims in the absence of separate end-to-end domain for refunds.

“To ease the financial stress on the textile sector, a ‘No Tax – No Refund’ policy is the only solution,” he suggested.

Hassan Naqvi
Hassan Naqvi
The writer is a staff reporter and can be reached at [email protected]

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