The Federal Board of Revenue (FBR) is working to speed up the processing of sales tax refunds, particularly for businesses that do not export goods. These refunds are classified as carry-forward-based refunds because they are related to multiple tax periods.
The FBR has issued directives to all Chief Commissioners of Inland Revenue to help with this process. The goal is to simplify and expedite the processing of sales tax refund claims spanning multiple tax periods.
Individuals and businesses eligible for non-export and/or input tax carry-forward-based sales tax refunds, as outlined in rule 34 of the Sales Tax Rules from 2006, must submit their claims using Form-7A along with their Sales Tax Return, according to the FBR instructions.
Form-7A, on the other hand, has proven difficult. It has not been enabled in such a way that registered individuals can easily file refund claims using Form STR7A.
Non-export-related claims necessitate close examination and cannot be processed at the same rate as export-related claims, such as those handled through FASTER. To overcome this barrier and address refund issues faced by registered individuals, the FBR has decided to allow the filing of carry-forward-based, non-export-related refunds through RCPS at tax offices in STARR (Sales Tax Automated Refund and Rebate) or through the Expeditious Refund System (ERS) until June 2024, or until Form 7A becomes available for online use.
According to a recent FBR announcement, field formations have been advised to promptly receive, process, and resolve such refund claims in accordance with the law. This step is expected to alleviate non-export sectors’ challenges and expedite the processing of sales tax refunds for a more efficient and timely system.