PRGMEA urges FBR to expedite refunds

LAHORE: The value-added, export-oriented textile industry in Pakistan is experiencing a severe financial strain, with a significant portion of its liquidity tied up due to a four-month delay in the release of sales tax refunds by the Federal Board of Revenue (FBR). Only a small amount was disbursed last week, leaving the sector struggling to maintain cash flow.

The Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA) raised these concerns during an executive committee meeting chaired by its Zonal Chairman Dr Ayyaz Uddin. The meeting focused on the financial hardships faced by garment exporters as a result of prolonged delays in sales tax refunds.

Meeting participants highlighted that the FBR did not release any refunds in October and has recently committed to processing refund payment orders (RPOs) issued up to September 30. This means only refunds from July will be disbursed, as most RPOs for August were not issued until October 10.

“We request the FBR to extend the RPO issuance date to the 10th of every month,” Dr Ayyaz said. He emphasised that exporters depend on timely refunds to manage cash flow effectively, and the FBR’s failure to meet its commitments has placed unnecessary financial pressure on the value-added textile sector at a critical time.

While the PRGMEA chairperson acknowledged the FBR’s efforts, he stressed the need to uphold the agreed-upon timeframe of 72 hours for refund processing. He noted that sales tax refunds of over Rs4 billion, collected in October, remain unpaid even four weeks past the due date.

Expressing gratitude for the partial refund released, the PRGMEA North Zone Chairman called for a swift disbursement of the remaining funds, which have been pending for four months.

Dr Ayyaz also pointed out that in a meeting with the PRGMEA in April, the FBR’s Member of Inland Revenue agreed to release sales tax refunds by the 10th of each following month. However, this commitment remains unfulfilled.

“Exporters are now facing a four-month backlog of withheld cash,” noted PRGMEA EC members, calling the situation unfair and detrimental to Pakistan’s export growth and foreign exchange earnings.

“We appreciate Prime Minister Shehbaz Sharif and Finance Minister Aurangzeb’s directive to the FBR to clear all pending refunds and address issues in the new refund payment system,” Dr Ayyaz added. He demand the prime minister ensure that these directives are implemented promptly, as exporters, particularly those in the SME sector, are struggling with severe liquidity constraints due to refund delays, despite the FBR’s new system launch.