The Federal Board of Revenue (FBR) has strictly directed the field formations to avoid deliberate delay in issuance of genuine sales tax and income tax refunds and action would be taken against the officials responsible for such delays, reflecting aggregated pendency of sales tax/income tax refunds of Rs 137.08 billion as on June 30, 2011.
Sources told Business Recorder here on Tuesday that the FBR has issued instructions to the Chief Commissioners of Large Taxpayer Units (LTUs) and Regional Tax Offices (RTOs) for taking action against tax officials personally responsible for delay in issuance of the genuine refund claims.
According to the FBR's instructions to the field formations, all Chief Commissioners Inland Revenue are directed to instruct their officers not to deliberately delay the settlement of genuine refund claims and as any officer found guilty of deliberately holding back the refund shall be held personally liable for such an act.
The FBR further said that Federal Tax Ombudsman (FTO) Office in a complaint has expressed serious concern over the figures of pending refund of income tax and sales tax as on June 30, 2011. As on June 30, 2011 the aggregated pendency of refunds was Rs 137.08 billion. Out of this amount the pendency of income tax refund was Rs 101.57 billion and sales tax refund was Rs 35.51 billion. The aggregated pendency of refunds was Rs 74.62 billion as one June 30, 2010. The break-up of Rs 74.62 billion revealed that the Rs 50.52 billion was related to income tax whereas Rs 24.10 billion was pending on the sales tax side. The aggregated pendency of refunds was Rs 50.31 billion as one June 30, 2009. Out of this amount, the pending amount of income tax refund was Rs 31.56 billion and sales tax refund was Rs 18.75 billion.
As per FBR's instructions, the FTO has observed that apart from damaging taxpayers' faith in the revenue collection system the exorbitant increase in pendency of outstanding refunds adversely affects the liquidity position of business, industries and exporters by way of blocking their capital resources. The FTO has further observed that disbursement of legitimate refund is purposely held by the field formations for reporting higher than real net collection of revenue. In view of the observations of the FTO mentioned, all the Chief Commissioners of the LTUs and RTOs have been directed to instruct their officers not to deliberately delay the settlement of genuine refund claims and as any officer found guilty of deliberately holding back the refund shall be held personally liable for such an act, FBR's instructions added.