The Federal Board of Revenue (FBR) will initially conduct "Post-Refund Audit" of each refund claim of Value Added Tax (VAT) under the Expeditious Refund System (ERS) for direct deposit of refund into the taxpayer bank account. Sources told Business Recorder here on Monday that the "Post-Refund Audit" of VAT claims would be reduced gradually with the implementation of the Expeditious Refund System for promptly issuance of refund cheques to the registered units.
The system would not conduct 100 percent audit of all claims filed electronically through the Electronic Refund Claim (ERC). In the first phase, all claims would be subject to the "Post-Refund Audit" in the manner of desk-audit to verify the documents and secondly, the authenticity of the FBR system would also be checked through this "Post-Refund Audit". This is being done to check the working of the electronic system under ERC submission. Once the system has been fully implemented, selective audit would be done on the basis of risk-based parameters.
As the taxpayer is no more required to submit invoices, credit notes, debit notes, goods declarations, bank credit advises, etc for obtaining sales tax refund, the department would only compare the documents to check the authenticity under the electronic refund system.
Sources said that the RRS would inform the registered taxpayers about the discrepancies in the claims at the time of filing of such claims electronically. Previously, tax officials pointed out discrepancies during manual processing of the claims. Under the new electronic system, the system will intimate the discrepancies in the claims before processing of refund. In this way, the discrepancies would be removed while filing of claims electronically.
The parameters for qualifying expeditious processing and payment of refunds included that the applicant should be manufacturer-cum-exporter registered in RTO Lahore (or other RTOs/LTUs, with effect from tax period July 2010). The registered person should be 'active taxpayer' and the amount of refund claim should have also been claimed in the corresponding Sales Tax / F. E. Return.
Moreover, the registered person should be registered as manufacturer-cum-exporter for this refund claim period. No short shipment and export GD objection by Customs should be involved in any of the exports mentioned in this refund claim. All the payments for purchases have to be made through banking instruments, by the registered person, as required under section 73 of the Sales Tax Act, 1990.
The refund should be claimed only to the extent of stock consumed. Refund claim amount has not been adjusted/claimed earlier. No short payment should be due against any of the returns filed so far. All the utility connections like electricity, gas and telephone for which inputs are claimed in this refund should be used in the business premises and full payment of these bills to be made.
The brought forward input tax amount in this claim from carry forward input tax amount of the previous claim(s) does not include quantities of raw material consumed in the exported goods covered in this claim. All the information provided in the RCPS format and this declaration is correct and the registered person shall be liable to legal action under the Sales Tax Act, 1990 in case of any mis-declaration is noticed by FBR staff posted at HQ or field formations, qualification criteria for expeditious refunds added.
The FBR has also issued a new declaration for the refund claimant under Expeditious Refund System. According to new declaration, taxpayer will declare that the amount claimed as refund relates to sales tax paid on raw materials consumed in the exported goods and the amount being carried forward relates to sales tax paid on raw materials presently in stock with the registered person.
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