Govt releases Rs100b in tax refunds

Published: April 4, 2020


ISLAMABAD: The government has released Rs100 billion in tax refunds under the Rs1.24-trillion stimulus package in the wake of coronavirus-fuelled lockdown.

The funds were released on Thursday, following the announcement of the incentive package by Prime Minister Imran Khan on March 27.

All tax refunds as of March 31, 2020 have now been cleared and the payments made on Thursday include Rs52 billion in sales tax refund to the industry (other than the export industry), Rs10 billion for the export industry through the FASTER system and Rs15 billion in duty drawback.

On top of these payments, the government has also released Rs20.5 billion under the Drawback of Local Taxes and Levies (DLTL) scheme.

In the current fiscal year, the government has so far released Rs163 billion in tax refunds – sales tax and income tax – to the industry, which is a 61.4% increase from the Rs101 billion released in the same period of last year.

Adviser to PM on Finance Abdul Hafeez Shaikh noted that these were unprecedented steps taken to support businesses and employment in difficult times. “Tax refunds released to the industry are the highest in Pakistan’s history.”

Shaikh added that the government’s stimulus package was aimed at addressing the liquidity challenges faced by the industry. “Improved cash-flow position of companies will ensure that workers get salaries on time,” he remarked.

Out of the total refunds, the Ministry of Commerce released Rs20.5 billion for textile exporters in a bid to improve financial health of the textile sector in the wake of the coronavirus-induced lockdown.

Earlier, the government had asked the textile industry not to lay off labourers following the lockdown. The release of refunds will help to keep the textile industry running.

The refund claims included duty drawback worth Rs10.8 billion for 2018-21 and Rs8.7 billion for 2017-18, said Commerce Secretary Ahmad Nawaz Sukhera in a tweet.

This amount includes Rs0.8 billion on account of DLTL for 2009-11, Rs45 million under the Drawback of Duties and Taxes (DDT) scheme for 2016-17 and Rs11 million under DLTL for 2016-17.

Sukhera pointed out that Rs27 billion was earlier released in November 2019 and March 2020. A total amount of Rs47 billion was released on account of refunds within 100 days, said the commerce secretary, adding that it should greatly help the liquidity position of textile exporters.

The previous two governments had released Rs67 billion worth of refunds, which included Rs25 billion during 2009-13 and Rs42 billion during 2013-18.

“The current government has released Rs93 billion so far in the first 20 months, which include Rs46 billion in 2018-19 and Rs47 billion so far in 2019-20,” said Adviser to Prime Minister on Commerce Abdul Razak Dawood in a tweet, adding that tax refunds for non-textile sectors would be announced in coming days.

Published in The Express Tribune, April 4th, 2020.

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