Mohsin Siddiqui (Chief Reporter)
The Federal Board of Revenue (FBR) has identified a significant ambiguity regarding the reconciliation of Rs 14 billion in Export Development Surcharge (EDS) for the fiscal year 2022-23 with the Accountant General of Pakistan Revenue (AGPR). This issue has prompted FBR to seek a response from AGPR to resolve the discrepancy in figures between the two entities.
Historically, FBR collected “Special Customs Duty” on the export of goods under the category of Export Development Surcharge. However, a procedural change led to the State Bank of Pakistan (SBP) directly transferring the EDS to the Export Development Fund (EDF) Account. This shift has caused a non-reconciliation of figures between FBR and AGPR, complicating the financial records for the said period.
According to the FBR’s report, the overall Customs Duty collections amounted to Rs. 931.727 billion, which included nearly Rs. 14 billion levied as Export Development Surcharge. The EDS was initially established by Section 11 of the Finance Act 1991 and further amended by the Ministry of Finance, Revenue Division’s SRO dated January 4, 2003. This collection was considered part of Customs Duties and was reconciled with AGPR under account head B-02203 (Receipts).
However, the Finance Act 2022 introduced an amendment to the Export Development Fund (EDF) Act 1999. This amendment stipulated that the EDF should now consist of the entire receipts of the Export Development Surcharge. Consequently, the EDS was transferred directly by SBP to the EDF Account, bypassing the FBR’s collection process. This procedural change has resulted in an ambiguity, leading to the non-reconciliation of figures between FBR and AGPR.
Following the Finance Division’s directive in a letter dated January 25, 2024, the FBR has taken up this matter with AGPR through a letter dated February 23, 2024. Despite this effort, the FBR has yet to receive a response from AGPR.
The unresolved reconciliation of the EDS has raised concerns about the accuracy and transparency of financial records between the FBR and AGPR. The FBR emphasizes the importance of resolving this issue promptly to ensure the integrity of financial data and maintain proper accountability.
Export Development Surcharge is a crucial component of Pakistan’s export strategy, intended to fund various initiatives aimed at promoting and enhancing the country’s export potential. The surcharge’s accurate accounting is vital for the effective allocation and utilization of these funds. Any discrepancies in the reconciliation process can lead to mismanagement and misallocation of resources, ultimately affecting Pakistan’s export development efforts.
The FBR’s proactive approach in addressing this reconciliation issue underscores its commitment to maintaining financial transparency and accountability. By seeking a resolution from AGPR, the FBR aims to rectify the discrepancies and ensure that the financial records accurately reflect the collection and allocation of the Export Development Surcharge.
In conclusion, the FBR’s identification of a Rs 14 billion reconciliation issue with AGPR highlights the need for clear and consistent financial processes. The resolution of this ambiguity is essential for maintaining the integrity of Pakistan’s financial records and supporting the country’s export development initiatives. The FBR remains vigilant in its efforts to resolve this matter and awaits a response from AGPR to achieve a satisfactory resolution.
