KARACHI: The absence of an electronic link between the provincial sales tax departments and the Federal Board of Revenue (FBR) has been depriving the exporters of refunds for two years against sales tax on services.
It is to be noted that after the passage of 18th Amendment, collection of sales tax on services became a provincial subject from 2010 and for this Sindh took a lead by setting up a separate body – Sindh Revenue Board. Punjab also formed Punjab Revenue Authority (PRA) the next year to collect sales tax on services.
But for the exporters there is no clear way to be adopted for getting their amounts stuck-up in the refund regime as they pay the tax to the provincial sales tax departments and have to file their return with the FBR.
Commenting on the issue, Towel Manufacturers’ Association Chairman Iftikhar Ahmed Malik expressed his surprise that where the exporters should go as they pay sales tax on services to SRB and PRA whereas file their tax returns with FBR.
However, with no link between FBR and provincial bodies collecting sales tax, the refund payment or adjustment has become im0possible, depriving exporters of much-needed funds.
He urged FBR and provincial sales tax bodies to immediately remove loopholes and shortcomings in the system to enable exporters receive their huge outstanding refunds with SBR and PRA.
Meanwhile, Pakistan Readymade Garments Manufacturers and Exporters Association (Prgmea) Chairman Amir Amin Kothawala urged Finance Minister Ishaq Dar to ensure early payment of outstanding refunds.
He said that for the last several years the Finance Ministry had not released funds to pay outstanding refund claims of around Rs40 billion.
Amin Kothawala said that exporters were faced with liquidity crunch mainly due to the huge backlog of refunds and were finding it difficult to meet their future export contracts.
Most of the outstanding refund claims were related to duty drawback on Local Taxes and Levies (DLTL), sales tax and refunds from customs, he added.
