Refund claims: central treasury to transfer cheques directly to exporters' bank accounts

The sales tax refund cheques will be electronically transferred directly to the exporters' bank accounts from a central treasury to be set up in Islamabad in July next. At present, all sales tax collectorates in major cities have their own treasuries. The new fast payment system would come into force after the centralised refund claims processing system "Stream" becomes fully operative. According to the Central Board of Revenue (CBR) sources, the refund cheques will be issued instantly on claims accorded Green channel by the "Stream", while claims falling under the Yellow channel would be referred to the auditors for clearance before the cheque is issued.
The new system would bring revolution in the refund mechanism, which earlier took days for payment to the exporters, causing acute liquidity problem for them.
To eliminate accumulation of huge sales tax refunds and their delayed payment was a big challenge for CBR Chairman Abdullah Yousuf, who took many bold steps to solve the problem.
The CBR, in the last budget, abolished sales tax on ginned cotton, eliminating 50 percent of the refund consumed by the textile sector. It formulated a new procedure for sales tax-free delivery of goods to the exporters.
The draft of new procedure had been circulated among the trade bodies for comment and it would be introduced from the next budget. This would further substantially reduce the quantum of refund obtained by the textile sector.
Meanwhile, the centralised refund processing system, "Stream", paid sales tax refund amounting to Rs 3,900 million all over the country in the first quarter of January-March.
This includes Rs 648 million on 52 claims in January; Rs 1,342 million on 114 cases in February; and Rs 1,910 million in 160 cases in March.
The CBR paid Rs 9,840 million refund during the same period on claims processed outside the "Stream." These include Rs 3,563 million on 2,594 claims in January; Rs 3,204 million on 2,304 claims in February and Rs 3,073 million on 1,956 cases in March. The statistics reveal that 40 percent of the total refund claims were processed by the new electronic system, and it will process hundred percent claims from July.
To begin with, about 200 exporters were selected to avail of the fast refund payment facility and now another 300 exporters were being provided the facility. Of all the 500 exporters, 150 belong to Karachi.
The exporters have welcomed the new electronic system for processing of refund claims and are keen to avail of the facility from July next.