This Blog is written by Mr. Hussain Mehmood, Senior Manager Taxation Advisory Services. Please read this blog and provide your valued comments.
Sales Tax Refund Bonds
A new mechanism has been introduced vide Finance Supplementary (Second Amendment) Bill, 2019 for payment of sales tax refund through sales tax refund bonds.
For the purpose of payment of sales tax refund through sales tax refund bonds, a private limited company with the name “FBR Refund Settlement Company (Private) Limited”to be incorporated.
The bonds to be issued in book entry form through an establishment licensed by SECP as a central depository under the Securities Act, 2015, in lieu of issuance of cheques or bank debit notes.
The Board shall issue a promissory note to the above mentioned company of refund determined and particulars of taxpayer/person.
The bonds shall be issued in values in multiples of one hundred thousand rupees.
The bonds so issued shall have a maturity period of three years and shall bear annual simple profit at ten per cent.
The bonds shall be traded freely in the country’s secondary markets.
The bonds shall be approved security for calculating the statutory liquidity reserve.
The bonds shall be accepted by the banks as collateral.
There shall be no compulsory deduction of Zakat against the bonds and sahib-e-nisab may pay Zakat voluntarily according to Shariah.
After period of maturity, the company shall return the promissory note to the Board and the Board shall make the payment of amount due under the bonds, along with profit due, to the bond holders.
The bonds shall be redeemable in the manner as in the preceding sub-section before maturity only at the option of the Board along with simple profit payable at the time of redemption in the light of general or specific policy to be formulated by the Board.
The refund under sub-section (1) shall be paid in the aforesaid manner to the claimants who opt for payment in such manner.
The Federal Government may notify procedure to regulate the issuance, redemption and other matters relating to the bonds, as may be required
Hussain Mehmood Asif