ISLAMABAD: The Federal Board of Revenue (FBR) has suspended online processing of Sales Tax Refund claims under the Fully-Automated Sales Tax e-Refund (FASTER) system.
Sources said that the FASTAR system of FBR is suspended since January 6, 2023 due to which exporters are unable to file Rs70 billion Sales Tax Refund claims.
It is pertinent to mention that the FBR has introduced FASTER in July, 2019 for processing refund claims of ex-zero-rated exporters at a fast-pace of 72 hours in the aftermath of the rollback of zero-rating. However, the FBR reportedly not processing refund claims of exporters in three days time period.
Recently, FBR officials have held meetings with representatives of leading textile exporters on suspension of online processing of Sales Tax Refund claims.
The FBR officials claimed that the processing of refund claims is suspended as the hardware and the software of the FASTER system is being upgraded.
The officials also pointed out certain individual cases involving sanctioning of inadmissible refund claims such as duplicate Invoice claims by certain taxpayers, duplicate claims of Goods Declaration, Processing of excess refund through FASTER over & above the maximum limit of 12% of export value, Transfer of excess amounts of refund in the accounts of the exporters and Check/restriction regarding debit /credit note.
Sources said that FBR claimed that it has also suspended some officials of PRAL with regard to sanctioning of inadmissible refund.
Sources also said that FBR officials also proposed to increase the limit of minimum value addition from 10% to 20% However, the same was accepted at 15% for an interim period of two months which will be reviewed after two months.
In addition, the Maximum limit of processing by FASTER will remain intact at 12 % till further review after two months.
Sources said that Textile stakeholders raised the issue of undue delay in payment of outstanding refunds which is creating a severe cash flow crunch for exporters.
They pointed out that refunds of Provincial taxes have been outstanding since 2013; whereas processing of deferred sales tax and outstanding income tax refunds is also suspended.
FBR officials responded that steps are being taken for the disbursement of all outstanding refunds to release the financial stress of textile exporters, sources added.
Sources also said that textile stakeholders also pointed out that since the rate of sales tax has been increased from 17% to 18%; therefore the threshold for tax refund may also be increased from 12% to 13%.
Moreover, they also pointed out that enterprises engaged in domestic businesses are getting adjustment of input tax on capital goods including building materials whereas exporters are being deprived of the same as refund is being denied.
Chair assured the stakeholders that steps are being taken for the disbursement of all outstanding refunds to release the financial stress of textile exporters.
Sources said that FBR has also slowed down the processing of the income tax refunds for the last seven months and taxpayers are approaching FTO to release refunds.
One senior official of the leading Textile exporter association told this scribe that exporters are facing financial issues and FBR has not processed the sales tax refunds for the last two months.
There has been an investment of four to five billion dollars in the textile sector for the last five years and business men associated with the textile sector are now requesting FBR to release billions of rupee refunds for continuing their business, he added.
The FBR spokesperson on the query of this scribe said that FBR has issued Rs20 billion in the last month in the head of refund. However, for some days there were certain issues on both sides i.e. certain system glitches which were to be rectified and some taxpayers were misusing those glitches to claim extra-refunds.
A meeting was held in which all exporters, especially textile exporters were invited to discuss the issues. They agreed on most of the points and it was assured to them the system will be up and running by Monday (today), the spokesperson added.
