August 13, 2002	Tuesday	Jamadi-us-Saani 3, 1423

ISLAMABAD, Aug 12 : The government has decided to establish a Sales Tax Automated Refund Repository (STARR) system at Custom House, Lahore with the aim to speed up refunds. The move is part of the restructuring of the tax administration.

Official sources told Dawn on Monday that the proposed system would be connected with all Sales tax collectorates in the country through fibre optics. This would be followed by automation of refund processing in sales tax collectorates and refund claim automation for the claimant.

The new internet based system would be accessible to all exporters to know the various stages of processing and the causes of delays in their refunds if any, the officials said.

The sales tax refund automation system was one of the IMF’s conditionalities for poverty reduction and growth facility (PRGF) programme to be implemented latest by October 2002.

It was observed that in the current system applications were entertained after compilation of monthly revenue receipts, tax profiles of refund claimants and their suppliers were used to incomplete, there was no linkage among collectorates and computerization of refund was negligible.

It was also noticed that the non-availability of central data for refund pendancy, sanctions and outstanding balances and the comprehensive manual pre-audit system added to much delay in the refund.

To overcome these and other shortcomings in the existing system, it was proposed that the particulars of the refund claim would be provided by the claimants in the form of a soft copy (floppy disk), on a software provided freely by the department and the information necessary to process refund claims would be brought together on to a central database.

Under the proposed system, all collectorates, the CBR and the central database would be linked together to provide online connectivity, and most of the processing from the receipt of the claim to the issuance of the cheque would be computerized.

The processing of the claim would be substantially speeded up and the status of a particular claim could be checked up online at any point of time.

Under the proposed system, the sanctioning of refund claims for gold and silver category would be within prescribed time limit and there would be no extensive pre-audit in their cases.

A usual refund claim consists of a large number of documents relating to import, export, local purchase invoices and utility bills. The processing of a refund claim entails many operations including arithmetic checking, cross-matching information, verifying documents and calculating admissible refund.

The process was long and cumbersome, but very necessary due to the massive size of the sector as about Rs36 billion were paid out as sales tax refund during 2001-02.

It was further observed that the manual processing of the claims was leading to a large number of problems in the present system, which could only be solved through the automation of the sales tax refund system.

The data related to imports and exports was already being substantially recorded at the various ports of the country. Similarly, the sales tax returns relating to manufacturing, processing and supplies were being received by the sales tax collectorates. And similar mechanisms also exist for capturing other relevant data. Thus a substantial amount of relevant information was already made available to the government in the form of discrete and isolated databases.

According to the officials, the new initiative would bring these databases together, linking them up and producing software that uses the available information to quickly verify the genuineness of the claim. Moreover, the new system shall also be able to speedily perform the various calculations that take a longer time when performed manually.

The new system would also enable the department and the refund claimants to electronically check the status of each case as well as allow the department to analyze the overall refund situation, the officials claimed.