Textile exporters have requested Adviser to Prime Minister on Finance and Revenue, Dr Abdul Hafeez Shaikh to intervene for revision of sales tax refund policy for export-oriented sectors and create a dedicated head (escrow account) for refund claims to be monitored by a committee comprising the Federal Board of Revenue (FBR) officials, audit firms and textile associations.
In a communication to Dr Abdul Hafeez Sheikh here on Monday, Shabbir Ahmed, Chairman Pakistan Bedwear Exporters Association, while strongly criticising FBR's SRO 918 (I)/2019, said that a dedicated head for refund claims, ideally an escrow account, should be created. If the collected amount goes into the consolidated fund, refund claims become susceptible to government's ways and means position leading to delays and denials.
The escrow account should be monitored by a committee consisting of nominees of FBR and textile exporting associations. If necessary, the government may also include top audit firms at the expense of the associations.
He said that the association is both surprised and dismayed at the issuance of the notification. The FBR seems to have chosen to ignore the request of the association to incorporate its input provided vide its letter No. PBEA/FBR/2019, dated 06/08/2019. The input had also been shared with the DG Exports by the association on the advice of the chairman FBR. The association had also requested the DG to share the draft notification with it and the other concerned associations before its finalisation, as it would have a strong bearing on the country's export efforts.
The association is afraid that the notification that has now been issued would negate the government's export policies that promise zero-rating. It simply fails to take into account the entire supply chain (for instance, it covers a large variety of products/processes like cartons, poly bags, inlay cards, swing threads, dyeing printing, weaving, etc.). It will seriously impact cash-flows and threaten several units with closure.
The notification in its present form will seriously hurt the export industry, Shabbir Ahmed added. The Annexure H form in the notification should be utilised for post-audit purpose and not for pre-verification of refund claims. The claim routed to FASTER module under section 39F of the notification shall be electronically processed. The data in the refund claim shall be scrutinised and verified by the system and the payable refund amount shall be determined on the basis of input consumed in exports or supplied. The refund payment order (RPO) of the amount found admissible shall be generated and the same shall be electronically communicated direct to the State Bank of Pakistan, within seventy-two hours of submission of claim, for onward advice to the respective banks, which shall be made by the State Bank of Pakistan no later than seventy-two hours of electronic receipt of an RPO, for credit into the notified account of the claimant no later than, Shabbir Ahmed added.
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