Exporters are totally confused over accurate filing of annexure, specifically annexure-H form (stock statement) of sales tax return form, required for claiming refunds under the new system of the Federal Board of Revenue (FBR).
Talking to Business Recorder here on Tuesday, Chairman Pakistan Bedwear Exporters Association (PBEA) Shabbir Ahmed said that the main issue is the submission of complex annexures along with the sales tax returns for July and August 2019 period for refund of exporters. However, the FBR has failed to fully address the concerns of the exporters despite their timely input on the whole issue.
Engr Daroo Khan Achakzai, President Federation of Pakistan Chambers of Commerce & Industry (FPCCI) has endorsed the viewpoint of Shabbir Ahmed.
The President FPCCI Tuesday while commenting on SRO 981(1)/2019 of dated 7th August, 2019 with special reference to Chapter V-A said that there is need of dedicated Head of Accounts sector-wise for creating transparency.
He further stated though Rs 22 billion have been released to exporters against refund payment orders (RPOs) issued as of August 31, 2019, yet new RPOs have been stopped which is creating liquidity crunch. The new refund system promised to issue refund within 72 hours has still not been implemented under the new rules which have some lacunas. The new refund rules are not very clear and refunds promised to exporters within 72 hours have still not been made.
Achakzai stated that the exporters are confused as the new system has not released pending refunds since 2008. The new system is full of errors and the exporters are facing a lot of issues and they cannot file the returns of refunds. Unless the new system is perfectly tested, it should not be applied. The FBR has already collected approximately Rs 48 billion (on the basis of last year data as current year data is still not available for textile exporters). In the month of July nothing has been refunded. The exporters should be informed how much amount of sales tax refund is outstanding as of 31st August, 2019.
Achakzai urged the FBR to take remedial measure immediately to solve exporters' problems.
Meanwhile, Shabbir Ahmed, Chairman Pakistan Bedwear Exporters Association (PBEA) said that from July 1, 2019 onwards, the FBR launched the refund system for exporters without any trial run. Last week, the FBR had conducted a workshop in Karachi with the exporters of bedwear and towels associations. The exporters are confused over filing of Annex F (carry forward summary) and H of the sales tax return form. Practically, when the exporters submit forms, it shows errors and calculating wrong figurers.
Shabbir Ahmed said that the exporters are totally confused as their refunds are blocked and even the pending refunds since 2008 have not been cleared.
The chairman PBEA was of the view that the working capital of the exporters is completely blocked due to non-payment of refunds. It is not clear why the FBR has hurriedly implemented the system without conducting its trial run.
He stated that the FBR should delay the launching of the new system for at least 2 or 3 months till the system is operating without error. "We have to make payments to our suppliers and workers salaries etc, which is almost impossible under current circumstances," he said.
He said that the FBR's SRO 918 (I)/2019 simply fails to take into account the entire supply chain (for instance, it covers a large variety of products/processes like cartons, poly bags, inlay cards, swing threads, dyeing printing, weaving, etc). It will seriously impact cash-flows and threaten several units with closure.
Pakistan Bedwear Exporters Association is both surprised and dismayed at the issuance of the notification. The FBR seems to have chosen to ignore the request of the association to incorporate its input provided vide its letter PBEA/FBR/2019, dated 06/08/2019. The input had also been shared with the DG Exports by the association on the advice of the chairman FBR. The association had also requested the DG to share the draft notification with it and the other concerned associations before its finalization, as it would have a strong bearing on the country's export efforts.
The notification in its present form will seriously hurt the export industry, Shabbir Ahmed added.
The Annexure H form in the notification should be utilized for post-audit purpose and not for pre-verification of refund claims. The claim routed to FASTER module under section 39F of the notification shall be electronically processed. The data in the refund claim shall be scrutinized and verified by the system and the payable refund amount shall be determined on the basis of input consumed in exports or supplied. The refund payment order (RPO) of the amount found admissible shall be generated and the same shall be electronically communicated direct to the State Bank of Pakistan, within seventy-two hours of submission of claim, for onward advice to the respective banks, which shall be made by the State Bank of Pakistan no later than seventy-two hours of electronic receipt of an RPO, for credit into the notified account of the claimant no later than, Shabbir Ahmed added.