TaxPayer

ERS to conduct post-refund audit of 5-10 percent claimants: FBR informs World Bank mission

ISLAMABAD: The Federal Board of Revenue (FBR) has conveyed to the World Bank (WB) that the Expeditious Refund System (ERS) would conduct post-refund audit of 5-10 percent of total claimants, based on risk-based parameters. Sources told Business Recorder here on Monday that the FBR has submitted a report to the WB review mission on the progress on the ERS.

The Board has informed the WB that the FBR will not conduct post-refund audit of all ERS refunds. Only a small proportion of cases (5-10 percent) will be post-audited, which will be selected on the basis of risk analysis. Thus, 5-10 percent of the refund claimants would go through the verification of process of post-refund audit.

The FBR will organise further seminars at all RTOs/LTU, particularly in Lahore, Karachi and Islamabad, on promised ERS and educate tax officials and taxpayers. About the procedure to partially reject refund claims, the report said that an objection to any single in-voice or other document of refund claim is making the whole claim void for processing under ERS which is then referred for manual processing by the system.

Currently, the system indicates that certain invoices/documents could not be cleared by ERS and give the claimant an option of taking the objected portion out of the refund claim and get the remaining claim cleared by the system. The FBR will adjust the ERS to automatically clear the portion that has no objection and clear the remaining portion once the objections are removed (mainly due to arrival of more current information) within a stipulated time period of a max of eight weeks from the date of initial processing by ERS.

Adjust the ERS to automatically transfer the claim to the normal system if claim is not cleared by ERS within eight weeks and pro-vide electronic intimation to the claimant. There will be no need for re-filing the refund claim containing the objected information. The FBR will establish that the claimant will only supply hard copies of invoices and other information relating to the portion rejected by the ERS.

In case the refund claims submitted beyond the stipulated period, the FBR will ensure that all pending cases regarding requests to file delayed refund claims will be solved promptly. To deal with the cases of 'Registered person does not exist', the report said that one explanation for this problem could be the large-scale blocking of cases by RTO, Karachi. The FBR will advise the claimant taxpayers to approach their respective Chief Com-missioners to resolve the issue.

The special excise duty (SED) and FED refund claims would not be processed under ERS, in the immediate future. The FBR will expand the scope of ERS to include these claims - ensure SED and FED claims are filed and processed under the non-ERS existing system for the time being according to the notification issued.

For the validation/verification checks under the ERS, the FBR will introduce in the ERS a validation/verification check at the time of receiving the e-claim to detect "unprocessable" claims and inform the claimant accordingly. The Board would adjust the ERS to ensure the claim is not being accepted until the validation checks are satisfied.

Sources said that the FBR will accept the information provided by the claimant regarding electricity and gas bills on face value. The Board would analyse options to receive electronically information from electricity and gas companies to cross-check it with the info supplied by taxpayers.

The ERS system seems to be deducting the carryforward amount twice. FBR explained that such double deduction could be a result of incorrect information provided in the declaration. The FBR has directed the PRAL/RTO team to sort this issue with the concerned taxpayers. The Board has also directed the PRAL team to look into the proper treatment of debit and credit notes. The FBR will also issue and circulate via e-mail necessary guidance/clarification to all refund claimants, FBR added.

The Board has also used SROs to allow sales tax zero-rating on re-meltable scrap, compost (non-chemical fertiliser), energy saver lamps and sprinkler and drip equipment, spray pumps and nozzles. SRO-based sales tax zero-rating is also applicable on wheel chair, diapers and import and supply of polyethylene and polypropylene for manufacture of mono-filament yarn and net cloth for supplies to green house farming. Sales tax zero-rating facility is also appli-cable on other items as specified from different SROs issued from time to time, sources added.