ST refund claims to be cleared before RGST introduction: Rs 46,087 million blocked

The Federal Board of Revenue (FBR) has segregated blocked sales tax refund into three categories to clear all pending refund claims before introduction of the 'reformed general sales tax' (RGST).
Sources told Business Recorder here on Friday that the FBR has divided pending sales tax refund claims into three different categories: (i) Cases where Refund Section Orders were issued but signing of cheques has been delayed; (ii) Cases where refund claims are in process and the system has not cleared them; and (iii) cases where refunds have been blocked as process of clearance by the system has not been started altogether.
The main reason for this exercise is that the RGST is going to be implemented from November, 2010 for which the backlog is to be cleared in the minimum possible time before the electronic system of refund issuance is fully in place by March 2011. Under the plan, a special cell of the FBR would monitor the performance of the Task Force in the field formations to check clearance of pending claims on day to day basis.
The FBR data shows that major amount of blocked sales tax refund of over Rs 37 billion is involved in 72 cases. There is an immediate need for reducing the number of blocked refunds, but it will also provide relief to the taxpayers. Therefore, an immediate plan is required to dispose of all pending claims without further delay.
According to sources, the issue of blocked sales tax refunds has become a priority for the introduction of the RGST. Since zero-rating and most of the exemptions are likely to be abolished under the RGST, major export sectors have apprehended liquidity crunch in case the blocked refund claims are not released immediately. It is a fact that during the post-integration period, the pace of issuance of refunds had also slackened, resulting in their blockage. As per latest data available, 46,049 refund cases are held up, involving an amount of Rs 46,087 million.
Major pendency has been observed in Large Taxpayer Unit (LTU) Karachi, involving Rs 18235.12 million in 1296 cases; Regional Tax Office (RTO) Karachi Rs 7527 million in 17321 cases; LTU Lahore Rs 5786.40 million in 964 cases; RTO Faisalabad Rs 1862.73 million in 5830 cases; RTO Lahore Rs 4560 million in 11719 cases and major pendency has also been observed in RTO Multan where pending amount of Rs 4550.40 million is involved in 3674 cases.