KARACHI: Chairman Federal Board of Revenue (FBR) Malik Amjed Zubair Tiwana announced to form a perpetual committee comprising three representatives of Karachi Chamber of Commerce & Industry (KCCI) and three Chief Commissioners of FBR which, in addition to expediting deferred cases of Sales Tax Refunds claims, would also discuss other taxation issues and review policy changes wherever required on a monthly basis.
Chairman FBR, who was accompanied by senior FBR officials during his visit to KCCI, informed that Refund Payment Orders (RPOs) against all refund Claims till July 10, 2023 have already been issued whereas refund claims of more than Rs100 billion, which have been deferred by the system, would be reviewed by FBR-KCCI joint committee so that the process for issuing RPOs for such refund claims could be expedited.
Special Assistant to Prime Minister Tariq Mehmood Pasha (via Zoom), Chairman Businessmen Group Zubair Motiwala, Vice Chairman BMG Haroon Farooki, General Secretary BMG AQ Khalil, President KCCI Mohammed Tariq Yousuf, Senior Vice President Touseef Ahmed, Vice President Haris Agar, KCCI Managing Committee Members and Former Presidents also attended the meeting.
Chairman FBR further stated that on an average, refund claims of Rs1 billion generate every day under the automated system which means FBR issues refunds of up to Rs30 billion every month but the process was delayed in the recent past due to some system malfunctioning, however, the FBR was trying to make up to the same level by issuing maximum refund claims every month.
He said that there was no human involvement at all at any stage in processing refund claims but when the system defers any refund claim, it is forwarded to field formations who seek necessary documentation to finalize the precise amount of refund claims.
He informed that FBR has declared this year as the year of ‘Sales Tax Fraud Detection’ and actions have been initiated against those absconders who have taken money from manufacturers against supplies but haven’t submitted their outstanding taxes.
In response to concerns expressed over customs rebates, Chairman FBR formed another committee to address the issues relating to Customs especially the revision of fixed rebate rates. In this regard, Chief Collector of Customs Karachi was nominated as members of the committee by Chairman FBR.
Commenting on DLTL issue, he said that although there was no provision for DLTL in the current budget but the FBR will look into the possibility of arranging funds for DLTL by making adjustments in other heads so that they taxpayers’ liquidity problem could be reduced to some extent.
He said that all the administrative issues highlighted by KCCI will be promptly resolved but the policy related issues can only be taken into consideration in next year’s budget.
While appreciating Chairman FBR’s announcement to form a committee to deal with ST refunds and other taxation policy related issues, Chairman BMG Zubair Motiwala nominated Vice Chairman BMG Haroon Farooki, Vice Chairman BMG Jawed Bilwani and Vice President KCCI Mohammed Haris Agar as members of the Committee. “I hope that with formation of this crucial committee, the refund process would pick up some pace”, he added.
He pointed that Sales Tax Refund cases mostly comprise of deferred payments, blacklisting or discrepancies which were the biggest hurdle in way of smooth issuance of refund claims. “Although the FBR claims of having refund claims of around Rs39.4 billion but these were probably clean refund cases only as the overall refund claims must be somewhere around Rs150 billion if all refund cases including those subjected to blacklisting, discrepancies or any other minor issue are also included”, he added.
He suggested that all pending refund claims may be adjusted against government levies such as Custom Duties, Sales Tax, Income Tax and With-Holding Tax which are payable by the claimant entity. “This will help to offset the refund obligations of FBR and provide the much-needed liquidity and support for enhancement of exports.”
He also stressed the need to refrain the field formations of FBR from demanding the same old documents which had already been submitted to FBR online and are available in FBR automated system. “The manufacturers should not be held responsible for failure of the suppliers to submit his outstanding taxes but this was, unfortunately, happening. Instead of delaying refunds of such taxpayers and asking them about the whereabouts of suppliers, FBR should utilize its own machinery and resources to catch such individuals for verification of sales”, he added.
Referring to Section 122 of Income Tax Ordinance, he stated that thousands of notices have been issued to registered entities by RTO Karachi raising queries and shortcomings in the Tax Returns filed by tax payers. “In the present economic conditions when the very survival of businesses is at stake, such notices are a source of harassment and leading to flight of capital”, he added and requested Chairman FBR to review the actions by RTO and issue directives to withdraw all such notices, besides refraining from misuse of discretionary powers.
Chairman BMG also noted that there was no provision of DLTL in current budget whereas previous DLTL claims have also not been cleared, hence, the government should issue orders to release those DLTL claims which had already been cleared by FBR and sent to State Bank for payment.
He further mentioned that with depreciation of Pak Rupee against US dollar and other currencies, the incidence of taxes paid by exporters on their inputs has drastically increased in terms of rupee. “However, the rates of Rebate applicable on exports has remained the same which in percentage terms has declined due to devaluation. It is, therefore, requested to review and increase the rates of Rebate so that inflation and devaluation of Rupee could be adjusted.”