Acting Chairman Salt Manufacturers Association of Pakistan (SMAP), Qasim Yaqoob Paracha pleads the government for immediate attention to the challenges faced by SMAP members in the processing of their sales tax refunds through the FASTER [Annexure H] system.He explains that in light of the withdrawal of the zero-rated regime from July 1, 2019, the FASTER system was introduced to streamline and enhance the efficiency of processing sales tax refund claims for export oriented industries.While SMAP acknowledge and appreciate the government’s commendable initiative in promoting nonconventional products such as FASTER for Sales Tax Refund,I am compelled to address the limitation of this system to only five prescribed export-oriented sectors. This exclusion results in an unintended injustice to other export-oriented industries, including the salt sector, which holds substantial potential to contribute significantly to the economic development of Pakistan.
On behalf of the Salt Manufacturers and Exporters Community, I am deeply concerned that it will weakened the recent notable progress and traction amongst foreign salt importers made so far by the salt industry.The current restriction on the application of the FASTER system to only specific sectors poses a threat to the momentum of growth achieved thus far.Regrettably, I have observed that, after more than four years of successful operation, the FASTER system has begun rejecting sales tax refund claims from exporters outside the prescribed zero-rated sectors, citing rule 39B of the Sales Tax Rules, 2006. This development necessitates our members to seek manual processing of sales tax refunds, introducing unnecessary taxman-taxpayer intervention and placing additional strain on the limited human resources of the Federal Board of Revenue.
The manual refund process not only extends the time required for the refund but also violates the stipulation in section 10 of the Sales Tax Act, 1990, which mandates the refund of input tax to registered persons within 45 days of filing the refund claim. Consequently, exporters from sectors beyond the specified five export oriented sectors face critical cash flow challenges, enduring delays of approximately 4 to 6 months in obtaining their refunds.
He further explains that in an era where global practices favor the adoption of technology to expedite processes, it is disheartening to witness a reversal in Pakistan’s approach. The Federal Board of Revenue’s insistence on slowing down the business process contradicts the prevailing global trend and imposes a severe setback to an already struggling economy grappling with unprecedented inflation.Despite the FBR’s longstanding commitment to minimising unnecessary human intervention, the recent actions appear to run counter to the spirit of such commitments. The anticipated benefits of this action remain unclear, except for an increase in interactions between tax officers and taxpayers, leading to additional hurdles and challenges for genuine exporters.
He urges the government to intervene in this issue and enable the smooth functioning of the FASTER system and extend its benefits to all exporters without any discrimination.We hope that the government will take swift action that would not only uphold the principles of fairness and equality but also contribute to fostering a business-friendly environment in Pakistan.
