Rs22 bn verified sales tax refunds being released: Shaikh

ISLAMABAD: Adviser to Prime Minister on Finance and Revenues Dr Abdul Hafeez Shaikh has stated that the government had decided to release Rs22 billion verified sales tax refunds immediately in order to provide liquidity support to the businesses.

“Income tax refunds between Rs1 lakh to Rs5 lakh for all years will be paid next month,” Dr Hafeez Shaikh stated in his tweets on Monday night.

He said that the government took an important decision on tax refunds for the promotion of economic activity in the country and for liquidity support to the businesses. The verified refunds of Rs22 billion for sales tax for all years will be released immediately, he added.

He stated that income tax refunds of Rs1.7 billion, up toRs0.1 million for all years would be released immediately. The verification process for other outstanding refunds to be expedited. The income tax refunds between Rs1 lakh to Rs5 lakh for all years will be paid next month.

Meanwhile, FBR Chairman Shabbar Zaidi stated on Monday that FBR was going to substantially modify its valuation model for determination of customs duty and other taxes levied at import stage. The old Customs General Orders (CGO’s) on this subject will be revised. For example, weight basis in auto parts etc will be done and changes will be made in consultation and for facilitation of the industry.

The FBR in its statement issued here on Monday stated that FBR releases first tranche of sales tax refunds processed through Faster system. The first payment through Faster module, against the refund claims for the tax period July, 2019, has been made on Sept 2, 2019, and the State Bank of Pakistan has confirmed the credit of the refund amount in the bank account of the claimant.

To another query regarding issuance of refunds through Faster mechanism, FBR’s Member Inland Revenues and official spokesman Dr Hamid Ateeq Sarwar said that the first cheque of Rs1.46 million was deposited into account of manufacturer exporter.

He said that the FBR so far received 1,362 claims for payment of Rs4.4 billion refunds so far. There are only 21 claimants who declared Annex-H that is mandatory to get refunds amounts because it is related to providing details of total input supplies for determining basis of exports proceeds in case of five major export oriented sector in the aftermath of withdrawal of SRO 1125.

Only manufacturers’ exporters could avail release of refunds through Faster and majority of commercial exporters filled Annexure-H so they were not eligible to avail this faster release of refunds amounts. So far the Faster system, he said, has become operational in terms of providing cheque into direct account of exporters within 72 hours after completion of all reconciliation procedures.

In consequence of rescission of SRO 1125(I)/2011 dated 31.12.2011, which allowed zero-rating of inputs of five export-oriented sectors, Federal Board of Revenue had committed with the exporters of the said sectors, i.e. textiles, leather, carpets, sports goods and surgical goods, that refunds shall be paid to them within 72 hours of filing of refund claim. 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. For this purpose, FBR has developed a new IT module known as Faster (Fully Automated Sales Tax e-Refund) and the same has been operationalised. This module shall process claims of exporters of five export-oriented sectors for the tax period July, 2019, and onwards.