PM''s package: steps towards payment of drawback claims introduced

The Ministry of Commerce and Textile has introduced major measures to facilitate duty drawback of local taxes. These steps include revolving limit that will be provided by the Finance Division to the State Bank of Pakistan, speedy verification of claims through the Federal Board of Revenue''s electronic data access to the SBP and elimination of role of textile associations in claims verification.
In this regard, the Ministry has issued a notification, ie, "Duty Drawback of Taxes Order 2017-18" here Saturday. Under the new procedure for claims issued by the ministry, the State Bank of Pakistan in consultation with Ministry of Commerce and Textile shall devise a mechanism to ensure prompt clearance of drawback claims in compliance with this order.
The units shall file claims for the incentive in the form as devised by the State Sank of Pakistan and submit it to the authorized dealer. The authorized dealer will scrutinize the claim as per the procedure circulated by the SBP. Claims found in order would be submitted to the field offices of State Bank of Pakistan - Banking Services Corporations (SBP-SSC) within two weeks after receiving the claim from the unit with an undertaking in the prescribed manner.
The SBP will scrutinize the claims and release the amount of claim to the authorized dealers, within 30 days, by debiting the relevant government head of account. The Finance Division will provide a revolving limit to SBP. The SBP will request for further release of funds to Finance Division once the limit is utilized up to 80 percent. The authorized dealers will credit the amount of claim received from SBP within twenty four (24) hours to the unit.
The FBR will provide electronic data to SBP for expeditious verification/ scrutiny of claims.
This procedure applicable for 50 percent of the rate of drawback shall be provided without condition of increment and para 2(d), ie, an additional 2 percent drawback shall be allowed for exports to non-traditional markets.
The SBP will issue a separate circular for implementation of Para 1(4)(b) and (c) in consultation with the Ministry of Commerce & Textile, new procedure added.
In supersession of notification No. 1 (42A)TID/17-TR-1I, dated 20th October, 2017 and in pursuance of entry 7 of item 39 of Schedule II of the Rules of Business, 1973, the Prime Minister Package of Incentives for Exporters approved by Economic Coordination Committee (ECC) of the Cabinet in order to provide duty drawback of taxes collected from garments, home textiles, processed fabric, grey fabric and yarn manufacturing cum-exporter units, and Duty Drawback of Taxes Order 2016-17, Textile Division has amended the order:
Under the Duty Drawback of Taxes Order 2017-18, it extends to the whole of Pakistan including exports from Export Processing Zones. It shall come into force at once.
The duty drawbacks under this order shall be allowed for the shipments made from the July 1, 2017 to June 30, 2018 as under: Fifty percent of the rate of drawback shall be provided without condition of increment. The remaining 50 percent of the rate of drawback shall be provided if the exporter achieves an increase of 10 percent or more in exports during performance year (FY 2017-18), as compared to the base year (FY 2016-17).
The actual rate of drawback shall be determined on the basis of annual performance of the exporter, but in order to improve her/his cash flow, the disbursement shall be allowed on the performance during July-December, 2017, subject to submission of a bank guarantee that the exporter will return the excess amount, in case his/her annual exports are less than the amount of drawback paid to him/her.
An additional 2% drawback shall be allowed for exports to non-traditional markets, ie, Africa, Latin America, non-EU European countries, Commonwealth of Independent States and Oceania.
As per eligibility criteria, the order said that the duty drawback shall be provided to manufacturing-cum-exporting units on export of products under specific Tariff Codes of the Pakistan Customs Tariff at rates specified.
The export performance in case of drawback at 1(4)(b) above shall be analyzed separately for each category of eligible products.
The units availing the drawback shall be registered with the Textile Division and use Textile Division''s online portal to follow subsequent Circular (s) issued by State Bank of Pakistan stipulated under para 4 (1) of this notification.
The unit availing the drawback shall be a registered sole proprietor, partnership or a company, and shall be a member of a textiles association registered with the Directorate of Trade Organizations, Ministry of Commerce & Textile, order said.
The units shall furnish data and any information related to its operations, domestic sales, accounts and exports as and when required by the Textile Division, the order maintained.
The receipt of drawback payments shall be properly reflected in the books of accounts or balance sheets of the unit.
The federal government reserves the right to conduct periodical, random, on the spot checks and audits to verify the claims filed and drawbacks received by the units under this order.
Any unit/authorized dealer which, in contravention of the provisions of this notification and SBP''s circular, through acts of omission or commission files/verify fraudulent claims shall be liable to penalty as determined by the SBP in their circular.