The Senate Panel on Finance and Revenue was informed on Thursday that the FBR could not withhold refunds exceeding Rs390 billion under an IMF condition, and the amount was therefore cleared within the stipulated timeframe. The Senate Panel on Finance and Revenue met at the Parliament House, Islamabad, under the chairmanship of Senator Saleem Mandviwalla to consider matters relating to tax refunds, sales tax on unsold jewellery returned under the Self-Consignment Scheme, honorarium for medical staff deployed during the budget session, and other financial and banking issues.
The Senate panel was informed that the matter regarding payment of an honorarium equivalent to five months' basic pay to medical staff performing duties during the budget session in Parliament House had been resolved. Minister of State for Finance Bilal Azhar Kayani stated that the Ministry of Finance and Revenue had issued the requisite instructions in this regard. The Senate panel also discussed the withholding of legitimate income tax refunds by the Federal Board of Revenue (FBR).
Representatives of the affected chemical company stated that its tax refunds had remained pending for the last six years, amounting to more than Rs270 million. It observed that delayed refunds adversely affected the cash flow of businesses and said the issue must be addressed amicably. Senator Mandviwalla highlighted that under the new system, refunds were expected to be processed within 72 hours.
FBR officials assured the Senate panel that the matter would be resolved within one month. The Senate panel also directed the FBR to release the refunds and report to the Senate panel within 30 days. Senator Talha Mahmood stressed the need to make the FBR more taxpayer-friendly and sought details of tax refunds for the last five years.
FBR officials informed the Senate panel that a new system had been introduced to reduce discretion and that refunds were now being issued systematically. They further informed the Senate panel that refunds amounting to approximately Rs197 billion had been issued during the first two months of the current fiscal year, compared with Rs157 billion during the corresponding period of the previous fiscal year, representing an increase of Rs40 billion.
Senator Abdul Qadir observed that if a taxpayer receives a refund after two years, it indicates that the refund was genuinely due. He called for action against officials responsible for unnecessary delays in the release of refunds. The Senate panel received a further briefing from the State Bank of Pakistan on the implementation of Foreign Exchange Circular No.
16 of June 24, 1999, regarding payment of interest/profit on Foreign Currency Accounts and measures aimed at protecting foreign investment and depositor confidence. Additionally, the Senate panel was briefed on the request of Jewelers & Gems Traders Association of Pakistan for the removal of sales tax on unsold jewellery returned under the Self-Consignment Export Scheme. FBR officials informed the Senate panel that under the Entrustment Scheme, the import of unsold jewellery was exempt from sales tax after completion of the required customs documentation.
Representatives of the Jewelers & Gems Traders Association of Pakistan pointed out that while exports were exempt from taxes, an 18% sales tax was imposed when unsold gold and jewellery were returned under the self-consignment scheme, creating an additional burden on exporters. They also highlighted issues relating to the treatment of gold and gemstones under SRO 760(I)/2013. In view of the SRO, the chairman said the Ministry of Commerce would be invited to the next meeting to discuss the matter and resolve it amicably.