FBR system fails to process refund claims: Exporters of seasonal products unable to file Annexure-H

Despite tall claims of the Federal Board of Revenue (FBR) for refund payments within 72 hours, exporters of seasonal products are still unable to file Annexure-H (stock statement) required for claiming speedy refunds under the FASTER system, resulting in blockage of exports.

All Pakistan Fruit and Vegetable Exporters, Importers and Merchants Association has expressed serious concerns with the FBR Member Operations (Inland Revenue) on sales tax refunds against purchase of packing material.

The FBR has confused the issue of exports of seasonal fruit with the exports made by five zero-rated sectors.

According to exporters, the issue of rejected sales tax refund claims of kinnow/mango exporters due to objection of "higher value of packing materials" on the basis of consumption of packing material is not the same as it is related to the five zero-rated sectors.

It is actually more than five percent of the export value, keeping in view the fact that the packing material is a major component of the export consignment because of high class moisture absorbed by imported paper used in corrugated boxes, they said.

It is suggested that necessary changes may be incorporated in the FASTER/ERS system, so that it can identify this specific sector and hence does not restrict itself to one percent of export value.

A letter PEVA FBR/20/2133 dated 28 January, 2020 has already been addressed to FBR Member Operations on this specific issue would be of great assistance in precisely following this issue: Firstly, exporters are facing another major problem, the exporters cannot submit the Annexure-H to process the sales tax refund.

The reason being, the FASTER/ERS system did not yet process the claims submitted through Annexure-H for the previous tax period due to exports are not existing, keeping in view the kinnow is a seasonal item, the exporters are unable to do exports before December-2019. Meaning, thereby, the Annexure-H for the tax period 11/2019 is not yet processed due to exports of kinnow started in December-19 but exporters purchased the packing material in tax period November-19 or earlier.

The FASTER/ERS did not process the claim in which the export amount is nil, so accordingly purchases of previous tax periods are also not considered without processing the Annexure of previous tab period, ie, November 19 or earlier months.

Secondly, the exporters have already been submitted the Annexure-H for the tax period November-2019, for processing the claims to take the carry forward amount of tax into next tax period December 19 but the FASTER/ERE Systems did not yet process these claims because there were no exports in tax period of November-2019, and accordingly they are unable to submit the time of next tax periods (December-19 to February-20) for processing of sales tax claims, and this is why the sales tax amount of Rs46.16 million cannot yet process in the FASTER/ERS system, while the reporters have already been paid to suppliers, and the same was claimed in their sales tax returns.

Thirdly, since the issues are serious in nature, badly affecting the cash flows of export members, it is therefore requested that prompt action may be initiated in the FASTER/ERS system to make the changes of five percent of packing material for fruit/vegetable exporters and process the Annexure of November-19 in which export amount is nil or allow our exporters to put the opening/brought forward balance amount manually in FASTER, without processing the previous tax period in which the exports are not existing. So the sales tax refund amount will be processed and cleared, the exporters added.