‘Faster-pharma’ rules of FBR: Sector planning to move high court

ISLAMABAD: The pharmaceutical sector is planning to challenge the “FASTER-Pharma” rules of the Federal Board of Revenue (FBR) in high court against the illegal “consumption based” refund procedure in violation of the Sales Tax Act 1990.

Reliable sources told Business Recorder that there is no response from the FBR on the revision of the “FASTER-Pharma” rules. There is a strong likelihood of challenging the FBR’s “FASTER-Pharma” rules in the competent court of law.

Legally, the input tax is refundable to pharmaceutical companies on the basis of purchases except exports. There is no sanction under the sales tax law to restrict the same on the basis of consumption. “FASTER-Pharma rules issued on March 7, 2022 by the FBR are not in line with the legal basis”. These are against the law and must be rescinded, immediately, he stated.

The industry has asked the FBR to rescind the “FASTER-Pharma” rules immediately. It is the present law, which entitled the refund on the basis of purchases not consumption and the FBR cannot act anything beyond the law.

The FBR had issued SRO 383 (1)/2022 to notify the new consumption-based refunds to the pharmaceutical sector through amendments to the Sales Tax Rules, 2006. The said rules would be challenged in the High Court, the sources added.

According to Pharmaceuticals Manufacturing Association (PPMA), the industry would be forced to shut down all manufacturing units resulting in severe shortage of medicines in the country. After another five days period, the whole industry would be closed.

The FBR has started collecting sales tax on the import of pharmaceutical raw materials used in the manufacturing of medicines from January 16.

The FBR had promised to reconsider the system of refund payments, but so far, no notification has been issued.

Moreover, the FBR has also not issued any statement to pay refunds on the basis of purchases, as 17 percent sales tax has been paid on the import of pharmaceutical raw materials used in the manufacturing of medicines.

The industry wants refunds on the basis of “purchases” and not consumption based. If the FBR fulfils its promise, the industry is ready to take back its strike call and shutter down of the manufacturing units.

Copyright Business Recorder, 2022