ISLAMABAD: The exporters of seasonal fruits have failed to meet export orders during winter due to non-payment of sales tax refunds pending since 2022 and bureaucratic hurdles created by Federal Board of Revenue’s (FBR) relevant field formations.
Apparently, the exports of seasonal fruits have been stopped in view of shortage of cash flow and no facilitation by the concerned Regional Tax Office.
Taking serious notice of the situation, FBR has issued a letter to the concerned Chief Commissioner Regional Tax Office to look into the matter and resolve the issue on top priority basis. The refund claims are pending with the RTO of Sargodha pertaining to the period of July 2023 to June 2024, FBR’s instructions added.
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Chairman FBR Rashid Mahmood Langrial has been requested to check reasons behind non-payment of refunds to exporters of non-zero-rated sectors including seasonal exporters of fruits and how a small RTO of Sargodha can stop entire exports of seasonal fruits in view of huge refund pendency during the last two years?
This specific case is a challenge for tax authorities that how refunds are not paid to exporters despite all kinds of automations, new systems, electronic refund payment systems like STARR, direct credit payments through FASTER and other speedy processes for exporters. In July 2024, The Commissioner Inland Revenue, (Refunds) were deputed at all Regional Tax Offices and Corporate Regional Tax Offices to clear pending refund claims. Why has RTO Sargodha not cleared exporters’ claims including deferred claims during the last two years?
“The exporters of Kino/ citrus/ mangos are bearing too many losses, as they need cash flow for their seasonal business for exports, which ultimately also means loss of foreign exchange to national exchequer. Prompt action may be taken to credit the amounts of Sales Tax refund for the Tax Year 2022-23 and 2023-24”, exporters had repeatedly requested RTO.
FBR Chairman has been informed that All Pakistan Fruit and Vegetable, Exporters, Importers, and Merchants Association (PFVA) significantly contribute in substantial generation of foreign exchange through export of fruits and vegetables globally. PFVA’s extensive effort to enhance export has resulted in steady growth of its exports from a few million dollars initially to a phenomenal growth of US$3billion in the financial year 2023-24. There is discrimination as compare to five zero rated sectors, the Sales Tax Refund amounts of our exporters are pending since long despite of our various letters to Commissioner-IR, RTO, Sargodha.
It is submitted that in last Kino season (2023-24) the exporters faced huge losses in exports due to various issues like low qualitative production and Ukraine-Russia war, high prices of container freights and other unavoidable reasons, resultantly the exporters of Fruit and Vegetables are facing a serious cash flow problem. The liquidity crunch is the core issue, as the cash flow shortfall had squeezed financial streams as a major portion of our exporters’ working capital, estimated more than Rs.200 million, had been stuck in the Sales Tax refund for the Tax Year 2023-24. The fact is, due to facing the shortage of cash flow, exporters are unable to meet the targets and export orders of current Kino season as well as upcoming seasons of potato and other fruit exports, despite that handsome number of export orders are in hand.
It is submitted that despite the instruction issued by the Prime Minister dated March 3rd 2024 to process the Faster/Deferred amount of Refund to FBR, as well as instructions issued by the FBR to field formations like RTO, Sargodha after issuance of special Refund Zones and given the power to CIR’s Refund to issue the pending sales tax refund, the RTO Sargodha didn’t issue yet issue Sales Tax Refund for the whole tax year 2023-24 of export members.
“We are really need the funds, so please clear the pending amount on account of Sales Tax refund for the Tax Year 2023-24 of exporters of Fruit and Vegetable Sector. Since the issue is very much serious in nature, badly affecting the cash flows of export members of PFVA, it is therefore requested that prompt action may be initiated to credit the amounts of Sales Tax refund for the Tax Year 2023-24,” the association requested FBR Chairman.
Regarding pendency of sales tax amount, exporters are continue facing hardship in processing of sales tax claims, no body cares about it and no response from FBR despite of various letters and tried to meet with Member Inland Revenue (Operations) for presentation and highlight the issues pending since long. There is discrimination with these exporters as compared to five zero rated sectors, they are updated and got sales tax refund up to August-24 while seasonal fruit exporters claims are still pending in RTO, Sargodha from July 2023 to June 2024.
Since the issues are serious in nature, badly affecting the cash flows of export members of PFVA, it is therefore requested that prompt action may be initiated to credit the amounts of sales tax refund already issued as well as to process the sales tax refund claims pending since long, the association added.
Copyright Business Recorder, 2024