Exporters in Pakistan outside of the five designated export-oriented sectors face a challenge in obtaining sales tax refunds due to limitations with the FASTER system. This has led to manual processing and verification, increasing interaction between tax officers and taxpayers.
The Federal Board of Revenue (FBR) has received concerns from these exporters about the manual handling of their sales tax refund claims. For over four years, the FASTER system functioned smoothly, but now it’s rejecting sales tax refund claims from exporters in sectors other than the designated ones, citing a rule from the Sales Tax Rules of 2006.
This sudden restriction has put exporters in a difficult situation, as they must now approach tax officers for manual processing, which is both time-consuming and can lead to potential errors or disputes.
To alleviate this situation, the FBR has advised taxpayers to file non-export-related sales tax refunds, especially multi-tax period (carry forward based refunds), using the Expeditious Refund System (ERS) or STARR system until June 2024.
Additionally, the FBR is addressing issues with Form-7A, which is necessary for claiming non-export refunds. To streamline the process, the FBR is allowing carry-forward based non-export refunds through RCPS at tax offices in STARR or ERS until June 2024 or until Form 7A is made available online. This measure aims to ease the challenges faced by registered persons seeking non-export related sales tax refunds.