Documents not needed for Sales Tax refund through Electronic Refund Claim: FBR

ISLAMABAD (May 14, 2010) – The Federal Board of Revenue has abolished condition for submission of documents including invoices, credit notes, debit notes, goods declarations, bank credit advises, etc, for obtaining sales tax refund using Electronic Refund Claim (ERC) under Expeditious Refund System.

The FBR on Thursday issued procedure for filing and processing of expeditious refund by IT system of the FBR, taking away all discretionary powers of the sales tax officials used for issuance of refund manually. Under the sales tax general order 19 of 2010, the registered person has to maintain all the record pertaining to refund claim including invoices, credit notes, debit notes, goods declarations, bank credit advices, etc and the same will be produced as and when required by the authorised officers of FBR.

However, the requirement to submit such papers and documents along with the ERC has been withdrawn by the board. Therefore, no paper has been required to be attached for processing of claims through ERC, sources said. The FBR has also issued qualification criteria for expeditious processing and payment of refunds. An ERC qualifies for expeditious payment of refund on fulfilment of the following conditions:

The applicant should be manufacturer-cum-exporter registered in RTO Lahore (or other RTOs/LTUs, with effect from tax period July 2010). The registered person should be 'active taxpayer' and the amount of refund claim should also have been claimed in the corresponding Sales Tax/FE Return. Moreover, the registered person should be registered as manufacturer-cum-exporter for this refund claim period.

No short shipment and export GD objection by Customs should be involved in any of the exports mentioned in this refund claim. All the payments for purchases have to be made through banking instruments, by the registered person, as required under section 73 of the Sales Tax Act, 1990.

According to the qualification criteria, the refund should be claimed only to the extent of stock consumed. Refund claim amount has not been adjusted/claimed earlier. No short payment should be due against any of the returns filed so far. All the utility connections like electricity, gas and telephone for which inputs are claimed in this refund should be used in the business premises and full payment of these bills to be made.

The brought forward input tax amount in this claim from carry forward input tax amount of the previous claim(s) does not include quantities of raw material consumed in the exported goods covered in this claim. All the information provided in the RCPS format and this declaration is correct and the registered person shall be liable to legal action under the Sales Tax Act, 1990 in case of any misdeclaration is noticed by FBR staff posted in HQ or field formations, qualification criteria for expeditious refunds added.

Under the Electronic Submission of Refund Claim under Rule 26A of Sales Tax Rules 2006, the registered person eligible for claiming expeditious refund will file refund application on RCPS format by logging in at FBR web portal. He will also complete declaration given at Annex-A electronically. If an ERC qualifies for expeditious payment of refund, then the registered person shall be intimated by e-mail.

If an ERC does not qualify for expeditious payment of refund, then the registered person shall be intimated by e-mail. In case an ERC qualifies for expeditious payment of refund, then the respective tax office shall be advised by e-mail and a system-approved Refund Payment Order (RPO) shall be placed in the Inbox of the treasury officer of the RTO for issuance of cheque to the registered person.

Simultaneously the refund claim shall be forwarded electronically to the concerned audit division of tax office for post refund audit, procedure added. It is learnt that the Pakistan Revenue Automation Limited (Pral) will devise procedure for manufacturers-cum-exporters for obtaining expeditious refunds for which a seminar would be held at Lahore on coming Monday. The seminar would be attended by the manufacturers-cum-exporters and other stakeholders to discuss the processes of expeditious refunds.

The FBR has also issued a new declaration for the refund claimant under ERS. As per declaration, taxpayer will declare that the amount claimed as refund relates to sales tax paid on raw materials consumed in the exported goods and the amount being carried forward relates to sales tax paid on raw materials presently in stock with the registered person.

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