Sales tax returns: the FBR has a new plan

FBR categorises pending sales tax refund claims into categories to clear all refunds before introduction of RGST.

ISLAMABAD: The Federal Board of Revenue (FBR) has categorised more than 50,000 pending sales tax refund claims worth Rs47 billion into three categories under a new plan to clear all refunds before introduction of the reformed general sales tax (RGST).

FBR data revealed that 72 cases contribute over Rs37 billion of pending sales tax refunds. More than 50,000 pending cases have refunds of more than Rs47,000 each.

Sources revealed that the FBR has divided pending sales tax refunds into three different categories. The first includes cases where refund orders have been issued but the signing of cheques has been delayed. The second category includes refund claims that have not been cleared by the system. The final category includes claims that have not been registered in the system at all.

Considering the RGST is going to be implemented in November, the backlog needs to be cleared in the minimum possible time before the electronic system of issuance of refunds is fully in place by March 2011.

According to sources, the issue of blocked sales tax refunds has become a priority with the introduction of the RGST. Since zero-rating and most exemptions are likely to be abolished under the RGST, major export sectors have apprehended a liquidity crunch in case the blocked refund claims are not released immediately.

Under the plan, a special monitoring cell of the FBR would monitor the performance of the task force in the field to check clearance of pending claims on a day-to-day basis.

Published in The Express Tribune, October  2^nd, 2010.