KARACHI: The chairman of the Federal Board of Revenue (FBR) has formed a six-member committee to expedite deferred cases of sales tax refund claims.

The committee will have three representatives of the Karachi Chamber of Commerce and Industry (KCCI) and three chief commissioners and would also discuss other taxation issues and review policy changes wherever required every month.

In a visit to the Karachi Chamber of Commerce and Industry (KCCI), FBR chairman Malik Amjed Zubair Tiwana said the refund payment orders (RPOs) against all refund claims till July 10 had already been issued whereas refund claims of over Rs100 billion, which have been deferred by the system, would be reviewed by the joint committee to expedite the process for payments.

On average, refund claims of Rs1bn generate every day under the automated system which means the FBR issues refunds of up to Rs30bn every month but the process was delayed in the recent past due to some system malfunctioning, he said, adding, that the FBR was trying to make up to the same level by issuing maximum refund claims every month.

According to the KCCI’s press release, he said that there was no human involvement 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 finalise the precise amount of refund claims.

He said that the 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.

On customs rebates, the FBR chief formed another committee to address the issues relating to customs, especially the revision of fixed rebate rates. In this regard, the Chief Collector of Customs Karachi was nominated as a member of the committee.

He said there was no provision for Drawback of Local Taxes and Levies (DLTL) in the budget 2023-24, but the FBR would look into the possibility of arranging funds for DLTL by making adjustments in other heads to reduce taxpayers’ liquidity problem to some extent.

Businessmen Group chairman Zubair Motiwala hoped that the refund process would pick up some pace after the committee’s formation.

He pointed out that sales tax refund cases mostly consist 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 Rs39.4bn, these were probably clean refund cases only as the overall refund claims must be somewhere around Rs150bn 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 customs duties, sales tax, income tax and withholding tax which are payable by the claimant entity to offset the refund obligations of FBR and provide the much-needed liquidity and support for enhancement of exports.

Published in Dawn, August 6th, 2023