ISLAMABAD, May 1: The Federal Board of Revenue (FBR) has failed to speed up the clearance of sales tax refund claims despite having spent billions on automation of payment system.

The board, under the World Bank-funded tax reform project, has introduced two automated computerised refund system Staar and Streem – few years back to check fake invoices and prompt refund payments.

A senior tax official told Dawn on Thursday that the new automated system neither helped in reducing the undue delay in payment of refunds nor completely eliminated the issuance of refunds against fake invoices. “The automation exercise has only caused billions of rupees loss to the national exchequer,” he added.

The official said that over 70 per cent refunds were generated alone from the five zero-rated export-oriented industries including textiles and the inefficient system was causing unnecessary delay in payment of refunds to the exporters.

FBR Chairman M Abdullah Yousuf has admitted that the deficiency in the automated system did not yield the desired results for which it was developed.

Addressing the collectors of sales tax conference recently, the chairman said that despite the automated system he did not have the actual figures of sales tax refunds sanctioned, withheld or details about the type of refunds.

Official statistics showed that the sales tax refunds have piled up to Rs25.8 billion up to March 31, 2008. This means that collectors of sales tax withheld these refunds to portray better performance of their respective collectorates in achieving targets.

The Sales Tax Department paid out Rs22.602 billion during the July-April period of the current fiscal year against Rs29.112 billion the same period last year, showing a fall of 22.36 per cent.