ISLAMABAD: The Federal Board of Revenue (FBR) on Friday announced the issuance of draft rules for the centralized payment of income tax refunds. The FBR released SRO 1239(I)/2020, proposing amendments to the Income Tax Rules, 2002, aimed at streamlining the refund process and enhancing transparency.
Under the new draft rules, the FBR plans to establish a Centralized Income Tax Refund Office (CITRO). This office will be responsible for the centralized payment of income tax refunds to eligible claimants, effective from a date that will be specified by the FBR. The move is part of FBR’s efforts to modernize its operations and ensure timely refunds to taxpayers.
According to the proposed amendments, once the new system is in place, commissioners will be required to transmit refund orders electronically. These orders, prepared under Sub-Section (4) of Section 170 of the Income Tax Ordinance, 2001, will be sent through the Integrated Risk Information System (IRIS) to the treasury officer at CITRO, using digital signatures. A copy of the refund order will also be retained by the commissioner for record-keeping.
The process further entails that the treasury officer at CITRO, along with a co-signatory designated by the FBR, will be responsible for issuing cheques or promissory notes for the approved refund amounts. These payments will be made to the FBR Refund Settlement Company Limited, or alternatively, through an online transfer as per the sanctioned refund order.
Additionally, CITRO will be required to prepare a daily statement of payment advice for the designated bank, ensuring that refunds are directly transferred to taxpayers. Notifications of these transfers will be sent to CITRO, the concerned commissioner, and the taxpayer, promoting a transparent process.
To ensure proper reconciliation and accountability, the in-charge of CITRO will be tasked with reconciling refund cheques and payment advices issued throughout the month with those received from the State Bank of Pakistan (SBP). The outcomes of these reconciliations will be recorded in the system to maintain accurate records.
In cases where a cheque is returned by the SBP due to any discrepancies or errors, the treasury officer at CITRO will be responsible for canceling the cheque if necessary. The canceled cheque will then be attached to the respective counterfoil of the cheque book to ensure proper documentation and audit trails.
The introduction of the centralized payment system for income tax refunds is expected to significantly reduce processing times and eliminate the manual bottlenecks that have historically plagued the refund process. The FBR is inviting public comments on these draft rules before finalizing them, in a bid to ensure that the new system meets the needs of taxpayers and enhances the overall efficiency of tax administration in Pakistan.
