Karachi, May 28, 2025 – In a powerful push for fiscal reform, the Institute of Chartered Accountants of Pakistan (ICAP) has proposed the introduction of a fully automated tax refund credit system in the federal budget for 2025-26.
The ICAP’s recommendations aim to address one of the most persistent pain points for taxpayers in Pakistan: chronic delays and inefficiencies in the issuance of tax refunds.
In its official budget proposals, ICAP emphasized that while the Federal Board of Revenue (FBR) has made several efforts to improve the taxpayer experience, a serious trust deficit still lingers. At the heart of this trust gap lies the issue of delayed or denied tax refunds—legitimate amounts owed to taxpayers that are often held back due to bureaucratic inefficiencies.
Taxpayers across Pakistan continue to suffer from repeated physical verifications and redundant documentation requirements for refunds that could easily be validated through the FBR’s own digital systems. ICAP argued that this not only slows the process but also undermines the very purpose of digitization.
To tackle this, ICAP has proposed a two-tiered automated tax refund system:
1. Automated Credit for Verified Refunds: If a refund is fully verifiable via the FBR’s online records, it should be automatically credited to the taxpayer’s account within six months—no manual processing required.
2. Manual Processing with Timelines: For cases requiring further documentation or scrutiny, refunds may still be processed manually—but strictly within a six-month window.
ICAP has stressed that such a system would not only speed up the refund process but also enhance transparency and predictability. Timely tax refund issuance, ICAP argues, is crucial for easing the financial pressures on individuals and businesses, especially small and medium enterprises (SMEs), thereby fueling economic activity.
The ICAP firmly believes that implementing an automated refund mechanism will significantly reduce administrative burdens, restore public trust in tax governance, and strengthen Pakistan’s overall tax infrastructure. With five strong mentions of the word “refund” in its proposal, ICAP has made it clear: without swift reform, Pakistan risks losing both taxpayer confidence and economic momentum.