Sales tax refund burden hits Rs85bn this financial year

August 20, 2024 (MLN): The government’s burden of sales tax refund payments to exporters and companies has reached a staggering Rs85 billion in the ongoing fiscal year (FY25), according to sources, causing significant financial strain and challenges for these sectors.

As per details, the sales tax refund stock for exporters in the textile, leather, sports, carpet-making, and surgical equipment sectors has reached a record Rs30bn.

Meanwhile, the sales tax refund burden for Sui Southern Gas Company Limited (PSX: SSGC) has reached Rs25bn.

Moreover, sources revealed that a deadline of June 2025 has been set for clearing refund payments to exporters in five key export sectors.

Approximately Rs30bn in refunds for these five export sectors are delayed because of non-claims in the system.

To address the backlog, the government will clear 10% of the refunds for five export sectors on a monthly basis.

"Refund payments identified in the exporters' system are being processed within 72 hours," FBR sources added.

The International Monetary Fund (IMF) has also directed FBR to clear tax refunds of exporters.

Data has been requested from all RTOs and LTOs to process delayed sales tax refunds for exporters.

Additionally, a monitoring cell will be established within the FBR to oversee the timely clearance of sales tax refunds for the export sector.

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