ISLAMABAD: The Federal Board of Revenue (FBR) has detected discrepancy between the information of the draft income tax refund orders issued by the field formations and the data generated by Pakistan Revenue Automation Limited (PRAL), delaying process of timely issuance of refunds directly in the bank accounts of the taxpayers. In this regard, the FBR has issued instructions to the Chief Commissioners of the Large Taxpayer Units (LTUs) and Regional Tax Offices on issuance of income tax refunds under Prime Minister Package. According to tax experts, after announcement by the Advisor on Finance on 16 April 2020 that the government would issue income tax refunds of Rs50 billion within one week the FBR has finally geared up the procedure for issuance of refunds directly in the bank accounts of the taxpayers once sanction granted by the Finance Division. The FBR has issued directions to the field formations. Recent direction of the FBR to the Chief Commissioners Inland Revenue states "that as repeatedly conveyed, draft refund orders under section 170(4) of the Income Tax Ordinance 2001 in which refund has to be issued under PM's Covid-19 Relief Refund Package, are required to be kept ready in draft form 'IRIS'. It has also been communicated that all legal and codal formalities in such cases need to be completed before hand, so that as soon as sanction is granted by the Finance Division, refund amounts are transferred to bank accounts of the taxpayers without any delay." FBR direction further states that "however, it has been noticed that there exists a difference between the information in respect of draft orders given by the field formations and the information generated by PRAL. This, prima facie, shows that some field formations have reported drafts to FBR without properly entering them in Iris. All Chief Commissioners are, therefore, requested to engage their local data centres i.e. DBAS to generate list of drafts available in prepared mode in Iris (not visible to the taxpayer). This list may be compared with the one sent to FBR and discrepancy (if any) may please be removed." It has been further directed "that reportedly in some cases the system verifies tax deductions but the field formations have not included those cases in their lists, In such cases, the Chief Commissioners are requested to take immediate action to ensure that all taxpayers get their due refunds as per law and policy", the FBR stated. Lastly it has been observed "that refund issuance is expected to take place in ascending order i.e. smallest amount of refunds need to be processed first. In case it is unavoidable to break such queue, reasons need to be recorded in writing", FBR added. When contacted for comments Shahid Jami, a leading tax consultant, explained the whole process of income tax refunds. He observed that though government has allocated an amount of Rs.50 billion for issuance of income tax refunds as a part of Prime Minister Relief Package for the taxpayers but the FBR does not appear to be on the same page with policy maker due to its peculiar mindset on refunds. Resultantly, due to this reason, the refund process has not been geared up despite announcement of issuance of refunds within a week period. Jami pointed out that as per Income Tax Ordinance 2001, FBR has no role in issuance of income tax refunds however FBR on the pretext of release through 'IBAN' has usurped the legal powers of Commissioners Inland Revenue and has devised the innovation in IRIS of draft refund orders. Jami was of the view that sanction of Finance Division referred in the FBR direction is also is also unprecedented and would further delay the implementation of relief package. The amount has to be paid from income tax collection but not from any other head of collection or levy of the government. He pointed that FBR direction to first process small claims is not understandable as instead of small amounts industry employing large workforce should have been given preference so that with increase in their working capital economy at large is boosted, the tax consultant added.
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