Karachi, July 28, 2025 – The Federal Board of Revenue (FBR) has initiated the long-awaited process of issuing deferred sales tax refunds to exporters, particularly those outside the five zero-rated export sectors.
This move comes as part of FBR’s efforts to streamline the refund mechanism and reduce delays in the disbursement of legitimate claims.
In a circular issued on Monday, the FBR directed chief commissioners of Large Taxpayers Offices (LTOs), Medium Tax Office (MTO), Corporate Tax Offices, and Regional Tax Offices (RTOs) to begin processing the deferred refunds using the FASTER system. The instructions referred to SRO 1507(I)/2024 dated September 24, 2024, which outlines a tiered refund cap structure of 2%, 3%, 4%, 5%, and 8% based on the export value and finished product classification.
To further facilitate timely disbursement of refunds, the FBR has now implemented a uniform upper capping policy. Under this, the maximum limit for refund processing will be either 10% of the export value or the amount of admissible input tax actually consumed in exports—whichever is lower. This ensures that refunds are granted in a fair and transparent manner, aligned with actual input usage.
Additionally, the FBR has instructed field formations to revisit and reprocess previously submitted refund claims and Refund Payment Orders (RPOs) that were earlier handled through the now-defunct Expeditious Refund System (ERS). These deferred refunds, which were blocked due to system objections related to high input-output ratios, must be recalculated under the new capping criteria for non-zero-rated sectors.
Through this initiative, the FBR aims to restore exporters’ confidence by expediting legitimate refunds and ensuring compliance through improved refund governance mechanisms.