KARACHI, July 29: The newly-constituted sales tax committee held its first meeting on Monday to discuss new sales tax refund rules proposed by the Central Board of Revenue.
The committee, announced by the finance minister in his budget speech, is charged to review and revise the existing sales tax refund rules under SRP-417. The objective is to speed up refunds of sales tax on zero-rated exports that have been subject to delays, causing financial liquidity to exporters.
The meeting, chaired by minister of state and chairman Export Promotion Bureau Tariq Ikram, was informed by member sales tax (CBR) Ramzan Bhatti that Rs35 billion sales tax refund had been paid in the fiscal 2001-02 as against Rs29 billion in 2000-01.
Mr Bhatti argued that the refund facility had been misused in the past and the CBR has been paying out more refunds than the actual sales tax collections. He emphasised that there was urgent need to control the fake and flying invoices to protect revenue interest of the government.
An important issue that was keenly debated related to refund of sales tax on all stocks in balance. However, trade representatives opposed the proposal to limit the refund on stocks up to the export production requirement of three months.
It was ultimately agreed that while some limit was necessary for allowing refund of stocks that were not yet used up in export production, the time period could be adjusted to suit the requirements of export sector and exceptions could always be provided for. The matter will be discussed further in the next committee meeting.
Another issue was the definition of “same state goods”. The new proposed definition covered not only the same state input goods but also their processing at different stages of production. On this aspect, it was thought necessary to get the view of the commercial exporters also.
The meeting was also attended by vice-chairman EPB Ejaz Ahmad Qureshi and senior officers of the sales tax department headed by member sales tax (CBR) Ramzan Bhatti.
The representatives from trade included Wajid Jawwad, G.R. Arshad, chairman, Textile Processors Association; Mian Muhammad Latif, chairman, Cloth Exporters Association Faisalabad; Ch. Abdul Haq, chairman, Cotton Powerlooms Association, Faisalabad; Fawwad Ijaz, chairman, Leather Garments Association; and Farrukh Sheikh from Tanners Association.
Meanwhile, Central Board of Revenue chairman Riaz Ahmad Malik has assured the exporters of resolving their all problems at the earliest.
In a meeting with the Pakistan Hosiery Manufacturers Association (PHMA) on Saturday, the CBR chairman said that issues relating to double refund and delays in payment of sales tax refund claims would be addressed and resolved on priority basis.
Riaz Ahmad Malik, who was assisted by member sales tax (CBR) Muhammad Ramzan Bhatti, chief (textiles) CBR Ashraf Khan, collectors sales tax (West and East) Sohail Afzal and Muhammad Afzal Bhatti, appreciated the role of PHMA members in promoting exports.
Referring to cases of double refund, the member sales tax CBR said that as per agreement reached with the CBR once the principal amount was paid by the exporters additional tax and penalty would be waived.