ISLAMABAD: The Federal Board of Revenue has proposed to the Ministry of Finance to issue investment bonds to banks worth amounting to Rs58 billion for settlement of huge amount of outstanding refund payments during 2013-14. The FBR has drafted the proposal for consideration by Finance Minister Ishaq Dar but the ministry has not taken any decision so far.
The FBR will again take up the matter with the Finance Minister in view of huge amount of refund payments to banks. According to sources, the proposal is to purchase bonds in the name of banks on the face value of pending refunds of the banking sector. The proposal is yet to be materialised as it requires further deliberations. It is to be noted that the FBR had introduced the concept of investment bonds in 2002 and issued Pakistan Investment Bonds (PIBs) to pay off its tax refund liability.
The FBR has also drafted the advance tax payment and refund position of 43 banks falling within the jurisdiction of Large Taxpayer Unit (LTU) Karachi. Moreover, separate lists of four banks falling within the jurisdiction of LTU Islamabad; six banks in LTU Lahore and one bank each falling in limits of RTO Multan and RTO Peshawar has been prepared regarding advance tax and refunds payments to the banks.
The advances expected from banks during 2013-14 and refund position as on end January 2014 has been reported by three LTUs – Karachi, Lahore and Islamabad and RTO Multan. The total tax advances expected from banks has been calculated to the tune of Rs20 billion (January to June) period and total refunds amounted to Rs58 billion.
It is expected that the proposal, if accepted, will create goodwill between the FBR and the banks who are contributing positively towards the achievement of revenue targets.