FBR admits blocking Rs532bn in refunds since 2014 to inflate revenue figures

Updated 10 Jul 2020

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FBR Member Inland Revenue Dr Ashfaq Ahmed says only Rs202bn is verified and processed so far. — AFP/File
FBR Member Inland Revenue Dr Ashfaq Ahmed says only Rs202bn is verified and processed so far. — AFP/File

ISLAMABAD: The Federal Board of Revenue (FBR) on Thursday admitted before a parliamentary panel that tax refund claims of over Rs532 billion had been blocked since 2014 to show higher growth in revenue collection.

The disclosure came from top FBR officials at the National Assembly Standing Committee on Finance meeting.

FBR Member Inland Revenue Dr Ashfaq Ahmed said that only Rs202bn is verified and processed so far. The fate of the remaining outstanding amount is still unclear despite the lapse of several years.

The FBR member was given a one-day deadline on Wednesday to disclose the actual amount of pendency of refunds with the tax body.

The committee, led by its chairman MNA Faiz Ullah, grilled top FBR officials over the non-payment of refunds and keeping the actual amount secret from policymakers.

Dr Ahmed informed the committee that the FBR has processed the payment of Rs89bn income tax refunds to the taxpayers. The total claims of income tax refunds are Rs414bn since 2014 while pending sales tax refunds are only Rs112bn, he added. However, he did not mention when this amount will be processed for payments.

FBR Member Policy Dr Ateeq Ahmad said that remaining income tax refund claims are either adjusted, eliminated by demand or are unverified. It clearly shows that FBR is not willing to pay the rest of the income tax refunds claims of Rs325bn on the plea of non-verification.

The FBR officials admitted before the committee that refunds were paid through supplementary grants under the Prime Minister’s Package. On this, MNA Ahsan Iqbal raised objections. He questioned how the FBR could make refund payments through grants. It is beyond logic that FBR can get grants from the government to pay refunds, he said.

Other committee members also intervened.

The FBR officials agreed that the amount will be adjusted in the current fiscal year.

Member Customs Operation Tariq Huda informed the NA committee that the stuck Customs rebate is around Rs6bn. However, he did not give any road map for its payments to the taxpayers.

The FBR officials claimed that the revenue target for the current fiscal year will be achieved.

Utility Stores discussed

The NA committee also took up the issue of subsidised items of Utility Stores being sold in the open markets. The committee chairman and MNA Fahim Khan alleged that subsidised products were being sold in the markets of Faisalabad and Karachi.

The committee also took notice of purchase of substandard pulses for selling to the general public.

MNA Dr Ramesh Kumar questioned the logic of the purchase of sugar at a higher rate of Rs79per kg when it was available at Rs70 in the open market. Committee member Dr Ayesha Ghous Pasha also criticised Utility Stores for purchasing sugar at a higher rate from the market.

MD Utility Stores Omar Lodhi suggested introducing computerisation in the stores to control pilferages. Not a single computer is there at any Utility Store across the country, he added.

However, he shared the performance of Utility Stores by reducing the losses in the outgoing fiscal year.

On the issue of non-formulation of the board of directors (BoD) of ZTBL, the committee criticised the Finance Division. The representative of the Finance Division said that a complete list of members is yet to be received from the ZTBL.

Dr Kumar suggested notifying those names which were approved by the State Bank of Pakistan.

Ms Pasha said the bank has an amount of Rs5bn, but it could not be disbursed to farmers because of the non-formation of BoD. The agriculture sector needs further help amid coronavirus outbreak, she stressed.

The committee chairman feared that ZTBL’s losses will increase further in case no corrective measures were taken. The committee recommended for early finalisation of the BoD members.

Published in Dawn, July 10th, 2020