The Collectorates of Sales Tax and Federal Excise are expected to resume process of making payments of sales tax refund claims from next month, under the policy of 'reconciliation', in the light of the directives of the Central Board of Revenue (CBR).
The concept of 'reconciliation', for clearing refund claims, has been introduced by Central Board of Revenue (CBR), to discourage the practice of fake invoices. The reconciliation process is expected to complete by the month end, Muhammad Nazim Saleem, Collector of Sales Tax and Federal Excise, Lahore, told Business Recorder.
The Collectorate of Sales Tax and Federal Excise Lahore has started work to devise a proforma in consultation with the stakeholders, so that payments of refund claims from March onward could be started, he said.
"We have engaged the representatives of Aptma, Prgmea and other trade associations to prepare a proforma for declaration of stocks which is expected to be finalised in next few days," he added. As far as exercise of reconciliation of stocks by the taxpayers is concerned, it will take at least a month period and the process of payment will be hopefully commenced by October this year, he pointed out.
The payment of refunds had been halted by the collectorate sometime back on the directives of CBR, which had received information that, in the month of May, fake invoices for sale and purchase of stocks were issued by importers. Now the refunds will be paid only after reconciliation of the stocks, which means the claimants will have to ensure and satisfy the collectorates that they have consumed all the stocks they have declared, Nazim Saleem pointed out.
As per earlier practice, they were issued refunds upon declaration of stocks, irrespective of the fact the material was consumed or not. But people misused this facility, especially after the budget, in which the government had declared a number of sectors zero-rated.
"Now under the directives of CBR, we have stopped making payments of refunds for the last two months, and we have been asked by the CBR authorities to issue the same after reconciliation, under which the claimants will be enjoying what he said 'first-in-first-out' (FIFO) facility. Under the process of reconciliation, there is also likelihood of collectorates' refunds towards the taxpayers, he pointed out.
To a question about concerns of the applicants regarding delay in clearance of the claims, he said "We are aware of their problems but until and unless they reconcile the stocks, we cannot issue them refunds," the collector said, adding, notices have already been issued to them about this exercise.
However, he pointed out that for the convenience of the taxpayers, utilities-related refunds have not been stopped. The officers concerned have been asked not to link utilities, ie gas and electricity related refunds with the reconciliation exercise, he disclosed.
To a question about registration of new sales taxpayers, Nazim Saleem said that CBR had given a target for the year, under which the collectorates have been asked to raise 15-percent registration, with receipt of returns, on quarterly basis. Moreover we also plan to set up camps in the provincial capital with the co-operation of the chamber and other business and trade bodies to convince people for ST registration.