The Federal Board of Revenue (FBR) has taken a significant stride towards enhancing efficiency and convenience for taxpayers by introducing electronic processing and issuance of income tax refunds under Section 170A of the Income Tax Ordinance, 2001.
The amendment, incorporated through the Finance Act, 2021, aligns with the FBR’s commitment to modernize tax processes and streamline the refund disbursement system.
Section 170A, a notable addition to the Income Tax Ordinance, 2001, reads as follows:
170A. Electronic processing and electronic issuance of Refunds by the Board.— Notwithstanding anything contained in section 170 of this Ordinance, commencing from tax year 2021, the Board may process and issue refund to the taxpayer who has filed the return of income without requiring a refund application by the taxpayer to the extent of tax credit verified by the Board’s computerized system as may be prescribed. The refund amount sanctioned under this section shall be electronically transferred in the taxpayer’s notified bank account.
This section marks a transformative shift in the mechanism of income tax refund processing and issuance. It grants the FBR the authority to electronically process and issue refunds to taxpayers who have filed their income tax returns. Importantly, this can be done without necessitating a separate refund application from the taxpayer, streamlining the process and reducing administrative burden.
Key highlights of Section 170A and the electronic processing of income tax refunds include:
1. Electronic Processing Initiated: The FBR is now empowered to electronically process and issue refunds to taxpayers, signaling a departure from traditional paper-based procedures.
2. Refund Without Separate Application: Taxpayers who have filed their income tax returns may receive refunds without the need to submit a separate refund application. This measure is designed to simplify the refund disbursement process.
3. Tax Credit Verification: Refunds will be processed to the extent of tax credit verified by the Board’s computerized system, ensuring accuracy and compliance with tax regulations.
4. Effective From Tax Year 2021 Onwards: The implementation of electronic processing of refunds under Section 170A commenced from tax year 2021, reflecting the FBR’s commitment to staying abreast of technological advancements.
5. Electronic Transfer to Bank Account: The refund amount sanctioned under this section will be electronically transferred to the taxpayer’s notified bank account, adding speed and efficiency to the disbursement process.
This initiative aligns with global best practices where tax authorities increasingly leverage technology to enhance the efficiency and transparency of tax-related processes. The move towards electronic processing of income tax refunds is expected to benefit taxpayers by expediting the refund disbursement timeline and reducing paperwork.
The FBR encourages taxpayers to embrace these digital advancements in the tax system and underscores its commitment to leveraging technology for the improvement of taxpayer services. Taxpayers are encouraged to stay informed about such amendments and utilize online platforms for a more seamless interaction with the tax authorities.
The introduction of Section 170A represents a pivotal step in the ongoing efforts to modernize and digitize tax administration in Pakistan, contributing to a more taxpayer-friendly and technologically advanced system.
