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FBR to implement new strategy for speedy sales tax refunds

ISLAMABAD (March 17 2009): The Federal Board of Revenue (FBR) has implemented a new strategy for immediate clearance of outstanding sales tax refunds claims, where supplies data/invoice summary objections have been removed by the Sales Tax Automated Refund Repository computer system (STARR).

In this connection, the FBR on Monday issued instructions to the Pakistan Revenue Automation Limited (PRAL) and directors-general of the Large Taxpayers Units (LTUs) and Regional Tax Offices (RTOs) for speedy clearance of claims through STARR.

The decision has been taken in cases where objections particularly non-submission of invoice summaries have been cleared by the STARR. According to the instructions, a large number of sales tax refund claims filed till July 2008 remained pending due to non-verification of requisite documents at the time of their original replication in STARR as either information relating to returns, invoice summaries and goods declaration (GDs) of various registered persons was not available in STARR.

In other cases, tax invoices of certain suppliers came under objection on account of “scrutiny of verifications of input tax” by the STARR. The latest details of pending refund claims relating to LTU/RTO have been uploaded on FTP (File Transfer Protocol), which show that the objections raised by STARR at the time of regional replication of refund claims are no more valid and can be cleared after replication.

Therefore, the directors-general of LTUs and RTOs have been requested to arrange replication of these claims afresh for final disposal. In case of any problem, the directors general of LTUs/RTOs should contact the Chief Automation PRAL and submit a weekly progress report to the Board, the directive said.

Explaining the procedure of replication, sources told Business Recorder that replication is the process used for electronic transferring of sales tax refund data from regional collectorate to the STARR program. Similarly, this process also covers dispatching of verified data from STARR back to the relevant collectorate. The replication process is being done to upload the refund data on the STARR for verification and checking of necessary documents including invoice summary data and supplies etc. The replication process is compulsory to ensure issuance of refunds on the basis of authentic documents of the registered units. Sources said that if the first-time filed refund claim is replicated from the RTO to the STARR and objections were raised by the system, the case was not processed due to discrepancy in the claim. The STARR objection is usually due to non-submission of invoice summary by the sellers, verification of input tax and other discrepancies in the claims.

If the missing invoice summaries were later submitted, the process of replication has to be again done by the collectorate to clear the pending claims by the STARR payment system. This is also necessary to clear the objections raised by the STARR during initial processing of claims.

According to sources, once verification is done by the STARR, the objections would be removed. Mostly objection is the non-submission of invoice summaries. The STARR would run the system in view of updated data and many refund claims would be cleared, but the collectorate has to connect with the system for payment of refund.

If the collectorate would not do replication again, the collectorates data would still show discrepancies despite clearance from the STARR. Through this system, the STARR has removed the discrepancies and now collectorate would electronically interact with the STARR for clearance of pending claims, sources added.

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