Based on carry forward: LTU, RTO to process non-export refunds


ISLAMABAD: The Federal Board of Revenue (FBR) has issued instructions to large taxpayer units (LTUs) and regional tax offices (RTOs) for the processing of sales tax refunds filed by non-exporting sectors involving a multi-period -taxes (deferral based on refunds).

The RBF has allowed the filing of deferral-based or non-export-based refunds through RCPS at tax offices in the STARR system or through the Rapid Refund System (ERS) until June 30, 2022.

In this regard, the RBF gave instructions to the field formations here on Saturday to remove difficulties in implementing the provisions of the rules and resolve reimbursement issues faced by registrants.

The RBF instructions stated that registrants claiming non-export or input sales tax refunds are required to file such claims by submitting Form 7A with the presentation of the sales tax return.

This form is not activated and registered persons requesting refunds under these rules have difficulty in submitting refund requests through the STR-7A form.

STARR, ERS system: registered persons authorized to submit non-export refund claims

Non-export refund claims require careful consideration and cannot be processed concurrently with export-based claims through the FASTER system.

The FBR has allowed the filing of deferral-based or non-export-based refunds through RCPS at STARR tax offices or through the Rapid Refund System (ERS) until June 30, 2022, the FBR added. .

According to details explained by a tax expert, after the establishment of the FASTER refund system in July 2019 to reduce processing time and speed up the refund process, sales tax refunds were tied to the filing of the schedule. “H” of the sales tax return.

It was therefore no longer necessary to submit a separate reimbursement request.

Under RAPIDE, initially the system only considers the tax credit based on the carried over amount of the June 2019 repayment payment order (RPO) or the contributed tax credit available in the repayment system rapid (ERS).

Since, overall, not all routine reimbursement requests were processed at the time of filing the first July 2019 reimbursement request via FASTER, a large number of reimbursement requests were blocked in the absence of the correct amount of deferred tax. credit.

The board of directors, after several months of efforts by commercial organizations, agreed to restate all rejected requests calling on the deferred tax credit of the July 2019 sales tax return.

This initiative gave a substantial boost to the elimination of the FASTER wait at that time and its successful implementation.

Besides routine claimants, there is another category of reimbursement claimants with sales of both local supplies and exports.

Based on the local / export ratio, taxpayers generally prefer to opt for an I / O adjustment and carry claims forward in the next month’s sales tax returns to avoid refund claims as much as possible.

However, during the gradual increase in the input tax credit or the export ratio, the cumulative amount of the tax credit could no longer be adjusted.

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There is no provision for processing refund requests from such an occasional refund requester through FASTER in the absence of the ability of the system to accept the amount of the tax credit carried forward from the tax return. sales tax and therefore not all of these types of claimants are able to claim their cumulative amount for refunds from multiple tax periods.

The board of directors, through the circular of September 8, 2021, has now attempted to resolve this outstanding issue by authorizing the processing of these refunds through the ERS.

It is understood that requests filed by occasional reimbursement seekers are rejected by RAPIDE and reported to the field training for processing via the ERS, explained the tax specialist.

However, he feared that since reimbursement was a sensitive topic, dealing with such reimbursement through on-the-job training would not be an easy task either.

In his opinion, the board of directors should introduce an appropriate SOP for the handling of such complaints via FASTER.

According to him, the generic and systemic solution is the only way forward to address these problems, which can only be done if the system allows the processing of refund requests by deferring the amount of the tax credit from tax returns. sale.

Copyright Business Recorder, 2021


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