ISLAMABAD: The Federal Board of Revenue (FBR) has withheld more than Rs30 billion refunds of exporters to show positive performance of the revenue collection machinery and to cover up the shortfalls for the time being, an official told Dawn.

The FBR move has created cash crunch for manufacturers. Textile Industry Minister Abbas Afridi held a meeting with top officials of the FBR on Wednesday to work out a road-map for release of sales tax refunds to exporters.

FBR Chairman Tariq Bajwa said that in the first quarter (July-September), Rs8bn refunds have already been issued to exporters. But he admitted that refunds worth Rs14bn were classified as ‘deferred payment’ on account of some deficiencies.

He said that the tax department has received claims worth Rs8.2bn from exporters. These claims were filed re­­cently with the tax department, he added.

The deferred claims, he said, would be disposed of before Feb 28 and instructions have already been issued to officials concerned.

The chairman highlighted that from July 2014 to January 2015, Rs14bn refund claims of the textile sector have already been paid as against Rs8bn

in the corresponding period of last year. He assured that the refund claims till October 2014 would be cleared before the deadline.

Bedwear exporters association’s Shabir Ahmad told Dawn that the government was not serious in increasing exports.

“They do not have any direction as all our working capital is blocked in refund of sales tax,” Ahmad complained.

Presiding over a meeting, the minister stressed that it was a national obligation to bail out the textile industry from cash flow crunch and release the stuck up claims on a priority basis as textile exports account for more than 55pc of foreign exchange.

Representatives from the textile sector highlighted that delay in payments was one of the main issues that keeps hindering their business cycle and requires immediate attention.

It was agreed to make the payment procedure more swift and speedy.

The minister was apprised that the issue of special excise duty has already been addressed. The minister was requested to look into the issue of duty drawback claims.

The industry representative believed that the Customs authorities have withheld an amount of Rs11bn in rebates.

The minister invited the stakeholders to come up with recommendations on domestic and export bifurcation and directed his team to make the procedure compliant to international best practices.

Published in Dawn, January 29th, 2015

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