ISLAMABAD - The government on Tuesday cleared sales tax refunds worth of Rs23 billion as it announced in the budget for the ongoing financial year 2017-18.

“All the refunds are transferred to the taxpayers’ accounts,” said Finance Minister Ishaq Dar in a ceremony held at Federal Board of Revenue (FBR). During the ceremony, Dar pushed the computer button to electronically transfer tax refunds. The ceremony was also attended by FPCCI President Zubair Tufail and other representatives of chambers and trade bodies. The FBR chairman, members of FBR and other tax officers were also present on the occasion.

The minister further said that clearing tax refunds would help the business community. During the budget speech for the year 2017-18, Dar had announced that taxpayers’ long outstanding demand for payment of refunds will be addressed soon and the sales tax refunds against refund payment orders (RPOs) issued up to April 30, 2017, shall be paid in two stages. Firstly, payments against RPOs involving amount up to Rs1 million were to be paid by July 15, 2017; and in the second stage refund against RPOs of amount more than Rs1 million were to be paid by August 14, 2017.

Dar said that refund payments up to Rs1 million were paid on July 15, 2017, whereas payments against RPOs exceeding Rs1 million are being issued today, well before the date earlier announced. He said that total refund including refund issued in the first phase come out to Rs26.43 billion covering 10,439 RPOs.

The minister said that these refund payments would not only cover exporters but all other claimants in all sectors of economy, adding that the refund would also resolve the liquidity problems being faced by the taxpayers. He said that to fulfil the commitment FBR is forwarding electronic payment advice to State Bank of Pakistan (SBP).

It is pertinent to mention here that for the first time refund payments were made through direct electronic transfer to claimants’ bank accounts through SBP in November 2016. Since November 2016, sales tax refund has been credited directly into the account of the taxpayers within 24 hours. State Bank of Pakistan has again been directed to make arrangements in this regard so that the amount of refund should be credited directly into the account of the taxpayers within 24 hours.

The minister emphasized cordiality in FBR-Business community relationship, saying that it was vital for good revenue generation, which in turn is essential for economic growth as envisaged by the government. Dar also urged the business community to play their role by investing in new areas, setting up industry and paying taxes to enhancing the pace of development in the country.

Talking about tax collection target, Dar said that he believed in difficult targets, which have resulted in sharp increase in revenue collection. Tax collection has enhanced to Rs3362 billion during last financial year 2016-17 from Rs1900 billion in 2013 when incumbent government took the charge, representing 73 percent growth. He vowed to enhance the country’s tax-to-GDP ratio to 15 percent. Dar said that the PML-N government has been sensitive to the issues faced by the business community arising from stuck up refunds.

On the occasion, FBR Chairman Tariq Pasha said they are working to enhance the tax collection and tax base of the country under the leadership of the finance minister.

He said that the timely and easy transfer of refund money to the exporter's account would encourage them to work hard to increase the country's exports.