PTBP Web Desk
The Federal Board of Revenue (FBR) has announced the expansion of the FASTER system to accommodate all categories of exporters.
This policy shift, effective from October 1, 2024, is set to transform the financial dynamics for exporters across Pakistan, ensuring that sales tax refunds are processed within just 72 hours. Initially introduced exclusively for five major export-oriented sectors, the FASTER (Fast and Secure Transmission of Electronic Records) system was designed to expedite the processing of sales tax refunds. Targeted sectors included textiles, carpets, leather, sports goods, and surgical instruments—industries that significantly contribute to Pakistan’s export revenues. The system, operational under the Sales Tax Rules of 2006, aimed to enhance cash flow for exporters by facilitating quicker refund payments.
The recent amendment, encapsulated in SRO 1507(I)/2024, marks a pivotal expansion of the FASTER system. From October 2024, every exporter, regardless of the sector, will have the ability to claim rapid refunds. This amendment is not only a testament to the success of the FASTER system but also an acknowledgment of the need for a more inclusive approach to support all export-oriented industries.
Under the new rules, the streamlined refund process will be applicable to claims for the tax period starting from July 2019 and onwards, as previously filed by exporters from the five initially designated sectors. Furthermore, from October 2024, this facility will be extended to all exporters concerning goods shipped overseas. It’s crucial for exporters to note that the processing of refunds for commercial exporters will be contingent upon the receipt of an export proceeds realization certificate or bank credit advice.
For claims that do not meet the criteria set for the FASTER channel, the FBR has designated an alternative processing route through the Sales Tax Automated Refund Repository (STARR) system. This ensures that all refund claims are handled efficiently, albeit through different processing channels based on their compliance with the specified criteria.
Another significant aspect of the amendment pertains to the refunds against goods supplied at zero-rate. For these transactions, refunds will be issued to the extent of the input tax paid on purchases or imports that are actually consumed in producing the supplied goods. This measure is expected to encourage the production and export of zero-rated goods, further enhancing the economic output.
The extension of the FASTER system is a strategic move by the FBR to alleviate the financial pressures on exporters by reducing the waiting time for refunds. By ensuring that funds are quickly reimbursed, exporters can reinvest in their operations and capitalize on growth opportunities without undue delays. This is particularly beneficial for small to medium-sized enterprises (SMEs), which often struggle with cash flow management.
The FBR’s decision to broaden the scope of the FASTER system is anticipated to have a positive impact on Pakistan’s export economy. By facilitating a more efficient refund process, the FBR not only aids in improving the business environment but also supports the government’s broader economic objectives to enhance export competitiveness.
This policy reform is expected to lead to increased export activities, contribute to the overall economic health of the country, and position Pakistan as a more attractive investment destination in the international market.
