In a relief, businesses are likely to easily get refunds of the excess value-added tax (VAT) they pay this fiscal year, according to a notice from the National Board of Revenue (NBR).
The revenue authority yesterday asked VAT offices in the field to grant refund to firms by debiting the amount using the same code under which they credited the collected VAT to state exchequer.
As a result, VAT offices will be able to reimburse the excess VAT paid without any complexity, said officials.
“Businesses will not have to take the hassle of going from one desk to another to get their due refund,” said an official of the NBR.
The directive comes amid concerns among entrepreneurs about getting refund of the excess amount of VAT paid after the government slapped 5 percent advance tax (AT) on import of goods other than capital machinery and spare parts.
The NBR said the AT imposed under the VAT law 2012 that became effective from this fiscal year is adjustable and the excess amount is refundable after adjustment.
Businesses were however sceptical in the light of their experiences related to availing refund from VAT offices.
Getting VAT refund was cumbersome and lengthy under the VAT law 1991. As a result, entrepreneurs had to wait for months.
The 1991 VAT law, which expired last fiscal year, had provision for claiming VAT refunds within six months.
There was no clarity about the settlement period of the claims, said a senior official of VAT Commissionerate Dhaka West.
Under the new VAT law, rules have been framed to settle refund claims within three months of application by businesses.
“If not settled within the stipulated period, refund claims by businesses would be accepted as per rules. So, the refund process would be easy and quick now. And the latest notice will be instrumental in this regard,” he added.
VAT refund was not possible due to limitation in the VAT Act, 1991 and VAT Rules, 1991, said Snehasish Barua, partner of chartered accountancy firm Snehasish Mahmud and Co.
The NBR proposed formation of a fund for VAT refund in the Finance Bill last month.
“This meant another bottleneck for VAT refund. However, this provision was not enacted in the parliament.”
And, as per the latest measure, entities will be entitled to get refund if they follow the due process as per the VAT and Supplementary Duty Act, 2012 and VAT and SD Rules, 2016, he said. “Such a measure will surely spread a positive message among the businessmen that the government is willing to give VAT refund,” Barua added.