FBR has prescribed stage wise timelines for processing and disposing of sales tax refund claims that have been deferred through its FASTER system, directing field formations to address pending cases and prevent the accumulation of refund claims. The instructions have been issued to Chief Commissioners Inland Revenue (CCIRs) and concerned field offices, with the Federal Board of Revenue seeking strict compliance with the specified timelines. The move comes as a significant number of refund claims deferred by the FASTER system after completing the required validation checks and cycles have remained pending at field formation level. According to the instructions, delays have largely been linked to taxpayers not submitting the required documents and subsequent processing taking longer than the prescribed period.
Under the revised procedure, the deferred memo is communicated through the FASTER system to the taxpayer as well as the concerned field office after completion of 12 prescribed validation checks or cycles. Once the deferred memo has been communicated, the concerned field office is required to inform the taxpayer and request submission of the necessary record and documents within seven days. The prescribed process is intended to establish a defined sequence for handling deferred refund claims, ensuring that cases do not remain unattended for extended periods because of missing information or delays in communication between taxpayers and field formations.
Where the taxpayer fails to provide the required information, or submits only part of the requested record, the field office will communicate an objection memo to the refund claimant. Reminders will subsequently be issued to seek a response and completion of the required documentation. If the taxpayer continues to remain non compliant, proceedings for issuance of a show cause notice are to be initiated under the prescribed procedure. This process provides a structured mechanism for dealing with incomplete refund claims while giving claimants an opportunity to address deficiencies before further proceedings are taken by the tax authorities.
The FBR instructions also cover the subsequent stages of refund claim processing. These include STARR replication and verification of the refund claim, followed by examination and processing of the case and its submission to the relevant sanctioning officer within the specified timelines. Examination and sanctioning of an admissible refund claim, along with issuance of a Refund Payment Order (RPO) or show cause notice, will also be subject to the timelines prescribed by the board. Through these requirements, FBR has established time limits across different stages of the process, covering the movement of a deferred claim from document submission and verification through examination and final disposal.
The board has also issued a checklist of documents that refund claimants are required to provide for processing their cases. The required information includes the Sales Tax Registration Number (STRN), National Tax Number (NTN), sales and purchase invoices, import and export Goods Declarations (GDs), relevant tax period, monthly sales tax return along with its annexures, bank account details, sales register, compliance with Section 73, authority letter and required undertakings, among other records. The Receiving or Processing Officer will check the availability of each required document when the refund file is received and will record any deficiency identified in the submitted documentation. This requirement is aimed at making deficiencies visible at the initial stage of processing rather than allowing incomplete files to remain pending.
FBR said the measures are intended to ensure expeditious disposal of deferred sales tax refund claims and address concerns raised by taxpayers and refund claimants regarding prolonged pendency. By establishing specific timelines for communication, documentation, verification, examination and sanctioning, the board has sought to bring greater structure to the handling of claims deferred through the FASTER system. The instructions also place responsibility on field formations to monitor pending claims and ensure that cases move through the prescribed stages within the applicable time limits.
However, the FBR has clarified that the prescribed timeline will not apply to refund claims relating to excess carry forward amounts and input tax carry forward under Section 8B of the Sales Tax Act, 1990. These cases remain outside the scope of the newly prescribed timelines, according to the board’s instructions. The clarification sets out the category of claims to which the new processing schedule applies while maintaining a separate treatment for claims falling under the specified provisions of the Sales Tax Act.
Follow the PakBanker Whatsapp Channel for updates across Pakistan’s banking ecosystem.