Privileged organisations, embassies and other international organisations will have to receive VAT refund from field-level VAT offices instead of duty exemption and drawback office as per new VAT law.
To this end, the National Board of Revenue (NBR) on Thursday issued guidelines to simplify the VAT refund process of privileged organisations.
However, the diplomatic organisations which applied for VAT refund before June 30 this year will get refund from Duty Exemption and Drawback Office (DEDO).
Field-level VAT offices will dispose of the applications for those who didn't apply for refund within the stipulated time even though refund was generated before June 30, 2019.
As per VAT law-1991, all the privileged organisations were getting refund of paid VAT from DEDO until fiscal year 2018-19.
With the introduction of new VAT and Supplementary Duty Act-2012 from July 01, 2019, the refund giving authority has been shifted to VAT zone offices.
Officials said both the VAT officials and privileged organisations were confused over the refund process under the new law.
At the request of field-level VAT offices and DEDO, the NBR issued the guideline to follow it at the time of processing the refund applications.
Officials said many organisations were applying to DEDO for getting refund of their paid VAT.
As per VAT law, privileged organisations are exempted from payment of VAT on many services including fuels for their vehicles and furniture etc.
They are entitled to get refund of VAT they paid at the time of availing services or purchasing products.
In the guidelines sent to the VAT offices across the country, the NBR said it has been learnt that VAT commissionerates are not disposing of refund applications despite clear legal explanation in this regard.
Earlier, the NBR issued another instruction, asking DEDO to dispose of refund applications it received from privileged organisations within June 30, 2019.
Section 68 to 72 of the new VAT law has a clear direction on the refund process. Section 71 of the law has stated the refund giving process for diplomats and international organisations, the guidelines said.
However, there is a difference in opinion between DEDO and field-level VAT offices on giving refund of paid VAT to exporters and privileged organisations.
Some field-level officials said they don't have expertise or sector specialists to give refund of paid VAT to exporters and privileged organisations.
DEDO has expertise to process and dispose of VAT refund applications, they added.
A senior official of DEDO, however, said the office has only two sector specialists and it has to seek help from relevant institutions in disposing of refund applications.
He said the VAT law has given the refund issuing authority to field-level offices, not to DEDO.
DEDO is empowered to give customs duty refund only from the current fiscal year as new VAT law scrapped its VAT refund issuing authority from July 01, 2019.
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