ISLAMABAD: The stuck up of refunds on both sales tax and income tax has again surfaced as major issue confronting taxpayers of the country in the second half (Jan-June) of the current fiscal year.
The major difficulty for taxpayers emerged where manual refund claims were made and Large Taxpayers Units (LTUs) and Regional Taxpayers Offices (RTOs) preferred to meet their monthly targets instead of processing refunds of taxpayers that resulted into creating severe liquidity crunch for the businessmen.
In order to resolve the lingering controversy of stuck up of refunds in last few months of the current fiscal year the FBR has convened a meeting with stakeholders on March 13, 2014 at the Board’s headquarters to resolve this issue.
As a matter of fact, those taxpayers who filed their refunds through electronic filing (Expeditious Refund System) they were not facing major difficulties in obtaining their refunds because this electronic system was providing refunds on the basis of first come, first serve basis.
But those taxpayers who are filing claims through manual system, the FBR was facing teething problems for verifying their data, causing undue delay in repayment of refunds.
The FBR has been facing an uphill task for scaling up its efforts to display highly ambitious tax collection target, which was already revised downward from Rs 2475 billion to Rs 2345 billion, for the current fiscal year but materializing of this revised target required professional handling of tax affairs to achieve it on June 30, 2014.
If one goes by the official figures, the payment of refunds does not seem major problem so far in the current fiscal year. Alone in February 2014, the FBR has repaid sales tax refunds to the tune of R 1.9 billion against zero payment in the same month of the last financial year.
On Income Tax side, the FBR paid less refunds in February 2014 as it paid Rs 1.2 billion in this month of 2014 against payment of Rs 2.1 billion in the same month of 2013, indicating almost 50 percent reduction in payment of refunds.
In first eight months (July-February) period of 2013-14, the FBR has repaid Rs 24 billion refunds against Rs 23 billion in the same period of the last financial year.
On Income Tax side, the payment of refunds went up in first eight months as it stood at Rs 41 billion in July-Feb period of 2013-14 compared to payment of Rs 31 billion in the same period of the last financial year.
But keeping in view difficulties of business community across the country, the FBR should find out solutions for those who are filing even manual claims. Instead of showing ballooning growth in revenues through stopping refunds in a bid to please the IMF will not serve any purpose and in the larger interest of boosting economic activities the FBR should provide refunds to the taxpayers in timely manner in order to avoid financial crunch for them at a time when the businessmen were facing innumerable difficulties in the wake of deteriorated security situation and energy outages.
