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Press Release

LCCI urges FBR to clear refund claims at the earliest

The Lahore Chamber of Commerce and Industry has demanded of the Chairman Federal Board of Revenue (FBR) release stuck-up refunds of around Rs.300 billion at the earliest as delay is adding to the miseries of the business community. 

In a statement issued here, the LCCI President Abdul Basit, Senior Vice President Amjad Ali Jawa and Vice President Muhammad Nasir Hameed Khan said that the industries in Punjab which are the major employment providers are on the verge of collapse and dozen of industries are closing down on daily basis. They said that although lack of supply of electricity is a contributory factor but 24/7 supply of energy is now ensured for the last 6 months or so.

They said that the last nail in coffin of industrial sector is being pushed by FBR, Lahore by refusing to release refunds stuck up with them for the last so many years. Sometime a major portion of the refund is “deferred” due to inexplicable reason for which no detail is given. The simple answer is given that FBR’s Computer System has automatically “deferred” it or “rejected” it. They said that when the industrialist meet FBR, Lahore requesting to issue PROs (Refund Payment Orders), they are told that FBR/ Islamabad has asked them not to issue PRO.

The LCCI office-bearers said that Advisor to PM on Finance Haroon Akhtar and Chairman FBR categorically denied having issued any instructions not to issue PROs. Incidentally PRO is just a piece of paper against which the government gives the cheques sometimes 6/12 months after its issuance.

They said that FBR, Islamabad and FBR Lahore offices have made the industrialist a snowball. The apathy of the FBR can be gauged from the fact that just about 2 months before the Federal Budget 2017-18, the jurisdiction of the commissioner which deals with major refunds has been changed. Now Commissioner has another excuse to delay the refund.

They further said that WEF JULY 2016, the coal and diesel was made ZERO rated for 5 export sectors for which a separate general order had to be issued by FBR for every exporter. However requests are still pending at FBR Lahore for months to refer their application, for exemption of sales tax, to FBR Islamabad. When businessmen connected FBR Islamabad, they denied any such impending change. Since most of the industries in Punjab have shifted to coal, as such the major refund is also stuck due to 17% sales tax on coal. Currently lot of order of  FTO are also pending for implementation. Industrialist are now scared of going to FTO  since FBR, immediately, upon receiving a notice from FTO, Opens audit procedure of the applicant.

“The industrialist finding no respite from the excesses of FBR are slowly either reducing their production or closing the industry, both of these shall increase unemployment. It is an international phenomenon that once a project stops production, it has less than 50% chance of restarting. This explains how the Punjab is facing deindustrialization. The industries are closing since their major working capital, which is blood line of any business , is stuck with the GOVT in refund their limits at the bank are exhausted which leaves then with no option but to close the industry”, the LCCI office-bearers added.

They said that FBR, to hide their failure of meeting the collection target, have adopted the easy way of squeezing the existing tax compliant assesses by withholding their sales tax and income tax refunds . Interestingly, FBR charges heavy interest of 18% and penalty equal to 100% of the principal, if payment of tax amount is delayed. 

They urged the Chief Minister Punjab Mian Shahbaz Sharif and Advisor to PM on Finance Haroon Akhtar to rescue the industrial sector of Punjab by releasing the stuck up refund which are admitted by FBR.