For making refund payment more easy and transparent by curtailing the powers of collectors of sales tax, the Central Board of Revenue (CBR) is planning to set up Centralised Refund Office (CRO) in Islamabad for depositing refund amount in exporter's bank account.
Official sources told Business Recorder here on Sunday that the CBR would set-up a centralised refund department in the Board for speedy processing of applications at Islamabad.
The CBR wants to eliminate laborious exercise of making cheques, verifications and frequent interaction between the exporters and collectorates.
The centralised refund office will be established in line with the recently established Centralised Registration Office at the Board.
The new system would ensure prompt payment of sales tax refund to the exporters falling into the category of "Green Channel" under the 'sales tax refund rules 2004'. Apart from "Green Channel", the refund claims covered under the "Yellow" and "Red" channels will be processed by the Collectorates of Sales Tax and CRO will subsequently issue refund to the exporters of all three categories.
Officials said that collectorates of sales tax block genuine refund claims only to show better revenue collection performance or to meet the targets set by the Board. The decision would not only check the delay in issuance of refund, but it also check any misuse of powers by the collectors.
The CBR will also assign gross revenue collection target replacing the past practice of fixing net revenue target so that the refunds could not be blocked.
Sources said that the CBR has also moved a summary to the President for getting permission of separate 'treasury account' for payment of refund to the exporters. Following approval, the CBR would independently make payment to the exporters using this 'treasury account'.
The new system would be linked with the Sales Tax Automated Refund Repository computer system "STARR" and STREAMS programme for speedy processing of refund claims.
The exporters will get sales tax refund within 24 hours of the filing of claim under the new scheme. But, the low risk exporters will not go through detailed scrutiny of record prior to issuance of refund.
However, exporters indulged in the phenomenon of flying/fake invoices could not avail refund under the new scheme.
Sources said that this is for the first time that sales tax authorities have taken such a bold step to forthwith give refund using computer system minimising interaction with the tax officials. However, the CBR expects that the exporters will honestly file claims with necessary documents for processing of claims through 'Green Channel'. If exporters claim genuine refunds, the CBR has no intention to incorporate any harsh clause in the new procedure.
In case of a refund claim assigned to the "Green channel, the tax official will only cross-match the supportive documents with the pre-designated electronic format to verify whether the refund claim is properly supported by documents. None of the previous refund schemes give such a lucrative opportunity to all the exporters to forthwith get refund.
If a high-risk exporter is referred to 'Red Channel' for audit during processing of a specific claim, it does not mean that every time when he files refund application, he will have to go through strict checking. Other claims of the same exporter may be processed through 'Green Channel' subject to submission of supportive documents.
In case of any discrepancy, the CBR will transfer the exporter to 'yellow channel' for carrying out scrutiny to ascertain the admissibility of refund claim.
Red channel will be allocated to exporters only in cases where pre-refund audit is necessary to verify stocks or deposit of tax for verification of claims by a senior auditor.
Officials added that refund will be issued on the basis of risk-parameters being devised by the Board.
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