In a significant move aimed at streamlining and modernizing tax refund processes, the Federal Board of Revenue (FBR) has ceased the manual processing of income tax refunds.
Instead, the FBR has directed tax offices to process tax refunds at the central level through the State Bank of Pakistan (SBP), according to officials’ statements on Wednesday.
The FBR issued an office order addressed to all chief commissioners of various tax offices, including Large Taxpayers Offices (LTOs), Medium Taxpayers Offices (MTOs), Corporate Tax Offices (CTOs), and Regional Tax Offices (RTOs). The directive emphasized the issuance of income tax refunds through the SBP from the collection head of income tax.
Under the new system, income tax refunds will be exclusively processed at the central level through the SBP. The FBR instructed field formations to promptly send refund lists when requested by the FBR, following the specified format and instructions provided.
The FBR also emphasized the importance of Commissioners Inland Revenue ensuring the legality and propriety of orders under Section 170(4) of the Income Tax Ordinance, 2001. As the custodian of jurisdiction and physical record of cases, the responsibility for the validity and correctness of refund orders lies with the field formation.
In a bold move towards greater efficiency, the FBR declared that manual processing of income tax refunds would no longer be carried out. Chief Commissioners-Inland Revenue were instructed to safeguard all voucher books in secure custody as part of this transition.
However, the FBR made an exception for refund cases where court or Federal Tax Ombudsman (FTO) recommendations are in play. In such instances, these cases may be sent separately for processing, reflecting the FBR’s commitment to a balanced and flexible approach, especially in situations involving legal or regulatory recommendations.
This shift towards centralized processing through the SBP signifies the government’s commitment to adopting modern technologies and best practices to enhance transparency, efficiency, and accountability in the tax refund system. By utilizing the SBP as a central platform, the FBR aims to minimize manual interventions, reduce processing times, and create a more seamless and reliable income tax refund process for taxpayers across the country. The move is expected to contribute significantly to the overall improvement of the tax administration system in Pakistan.
