FBR admits faults in refund software caused delays

ISLAMABAD: After years of the government having projected automated tax refunds as success story, the Federal Board of Revenue (FBR) on Wednesday conceded that its signature Fully Automated Sales Tax e-Refund System (FASTER) was inherently problematic.

The admission of fault has come about even though the exporters, particularly the textile exporters, had been agitating almost at every level of the government and parliamentary committees that 25-30 per cent of their refund claims remained unattended and thus unpaid.

The government and the FBR have always contested such claims, saying the FASTER system was an error free automatic system and no refund could be delayed beyond 72 hours after the filing of Form-H by the exporters.

However, now the FBR has confirmed the system was faulty and thus an alternative system had now been put in place to address exporters’ problems. “The matter has been analysed threadbare at the head office, and found out that the problem of missing amounts cropped up due to the very designing of the FASTER module plausibly on three counts” the FBR circular said.

These included (i) FASTER was programmed to pick the least of the three opening balances of carry forward of previous month from Sales Tax Return, Annex-H and the e-RPO generated; (ii) FASTER module’s non-synchronisation with STRIVE i.e. Serial 7a and 7b of the Sales Tax Return; and (iii) Misapplication of section 8B to certain exporters in FASTER module.

“These design flaws resulted in wide-going anxiety amongst the exporters’ community as large number of missing amounts claimed by them was not being reflected on their e-RPOs after processing by the system”, the circular said.

It said the matter had now been addressed. The matter having two dimensions, that is, improving the system design for future glitch-free processing of refund claims in FASTER, and devising a mechanism to deal with the past missing amount cases expeditiously and judiciously, has been resolved.

Talking about future processing module, the FBR said the problem of opening balance had been overcome by de-linking the opening balance of Sales Tax Return and Annex-H effectively, and linking it to the previous e-RPO alone.

“Going forward, this improvement in the FASTER module will not only solve the issue of missing amounts arising due to opening balances but also the issue of non-synchronisation of FASTER system with Sales Tax Return and application of Section 8B on certain exporters.

Regarding the process for past missing amounts, the FBR said it had also been solved. In all cases wherein the missing amounts could be effectively pulled up by the system, have already been communicated to taxpayers for re-filing after adequate modifications in the refund claims/sales tax return.

Secondly, in all remaining cases, where a taxpayer believes that a material amount of his refund claims has been unaccounted for, he may apply to the Deputy Commissioner concerned who examine the case and after due verification, will sanction the due amount.

The notification said the chief commissioners concerned would keep a complete log of the pending missing amount refund cases in their formations and ensure their disposal and processing in the shortest possible time as per law, and instructions.

The notification said the FASTER was introduced in January 2012 in the wake of rollback of zero-rating extended vide SRO 1125 of 2011 issued under sections 3(2)(b) & (6);4(c); 8(1)(b); and 71 of the Sales Tax Act, 1990, to process and sanction exporters’ refunds expeditiously.

“Although, FASTER was rolled out inside the very first quarter of tax year 2020, yet it continued to malfunction on multiple counts producing suboptimal outcomes”, it said adding one evidence of FASTER’s malfunctioning was that the system would simply miss out on sales tax credits of various taxpayers stalling processing of their refund claims.

“This system glitch created problems for exporting taxpayers in terms of uncertainty and stuck-up liquidity, and for the tax administration in terms of credibility deficit”, the FBR confirmed.