The fate of deferred refund claims should be decided once and for all which are pending since 2003 and belong to the small and medium enterprises from Gujranwala, Faisalabad and Sialkot, said exporters from value-added textile industry. It may be noted that the finance ministry is likely to make sales tax refund payments to exporters, having refund payment orders (RPOs) until 30th of June 2016, in the first week of next month. The government had made a payment of Rs 21 billion on August 24, 2016, against the RPOs issued until April 2016.
Talking to Business Recorder, the exporters pointed out that the Federal Board of Revenue has never entertained the deferred claims due to inherent faults filed manually by small units from the cities other than Lahore in 2003. "The value-added exporters from Gujranwala, Faisalabad and Sialkot are not satisfied with the FBR because of the phenomenon of deferred claims," said the sources.
"Majority of these cases are of manual nature where the verification process is very complicated," they added. Former chairman of Pakistan Readymade Garments Manufacturers and Exporters Association Sajid Salim Minhas, when contacted, agreed with the impression carried by other exporters in the town, saying that around 70 percent of the deferred claims are non-verifiable, the fate of which is needed to be addressed as early as possible.
He said the FBR officials have informed the industry that the actual figure of stuck up refunds in February 2016 was Rs 110 billion against the industry's claim of Rs 200 billion. "Out of Rs 110 billion, the government had cleared Rs 23 billion stuck up claims until 30th of June in the month of August," he said. "The refund claims may again have reached Rs 100 billion from the July till date, out of which some Rs 70 billion are incomplete in terms of paper work."
Sajid said majority of the exporters, especially in Lahore, have come out of the circular debt of refunds as the government has exempted the value-added exports from sales tax since the start of new fiscal year, with imposition of one percent non-refundable tax on packing material.
Meanwhile, Chief Co-ordinator PRGMEA Ijaz Khokhar said a good number of production units have been closed down due to liquidity problems in Gujranwala, Faisalabad and Sialkot. He agreed with the fact that the SMEs are the real victims of the situation whose refund claims have been put under the column of 'deferred' since long. He has suggested that all the stuck up claims, other than the deferred claims, should be cleared forthwith to strengthen the exports which are already on a declining trend in the recent past.