Though the Federal Board of Revenue (FBR) has issued refund payment orders (RPOs) for January and February 2015, some exporters are still waiting for their cheques. This was revealed during an anecdotal survey of textile exporters by Business Recorder. The exporters lamented this delay which they pointed out was in spite of the commitment of Finance Minister Ishaq Dar made in his budget speech 2015-16 that refunds to export oriented sectors relating to tax periods till May 31, 2015 shall be issued by August 31, 2015. When contacted, textile industry stakeholders said that about Rs 100 billion of textile exporters are stuck with FBR in sales tax, customs rebate and federal excise duty refund regimes creating severe financial crunch.

The sales tax refund issue has been a sticking point between the textile mills and the government with the former repeatedly insisting that delays in refunds are negatively affecting their sector. All Pakistan Textile Mills Association (APTMA) office bearers told Business Recorder that delay in payment is one of the main issues hindering their operations and requires immediate attention. Value added textile sector office-bearers said that about 2 percent of the value of total textile exports is stuck with FBR under different schemes, making it difficult for them to remain viable. The FBR officials in a recently held meeting challenged the amount of refunds cited by APTMA and maintained that refund claims are no more than Rs 25 billion and would be cleared by 31 August, as per the government''''s commitment.

The FBR has taken some decisions to expedite payment of refunds and duty drawback to the textile exporters. In the last meeting between FBR and APTMA, the industry objected that the Expeditious Refund System (ERS) for payment of sales tax refund claims entertains those claims where the refund claim does not exceed 3.5 percent of value of supplies. It was suggested that the said threshold needs to be increased. The FBR decided that the FBR Member IR Operations should appropriately increase the said threshold.

Copyright Business Recorder, 2015