Prompt payment of IT refunds: FBR chalks out new policy

The Federal Board of Revenue (FBR) has chalked out a new policy for prompt payment of income tax refunds under which verification of tax payments would be done before receiving refund applications through electronic data of tax payments. The FBR on Thursday issued the new tax policy on income tax refund to the Large Taxpayer Units (LTUs) and Regional Tax Offices (RTOs).
The board has issued directives to the field formations on special order of FBR Chairman Sohail Ahmed to ensure speedy payment of refund to the taxpayers. A letter has also been issued by the FBR Chairman to the Director Generals of LTUs and RTOs to immediately pay sales tax refund in genuine/admissible cases. Sources told Business Recorder that the change in the tax policy would enable the taxpayers to obtain income tax refund without any delay.
Under the new policy, the process of verification of tax payments in refund claim cases would be done before the receipt of refund applications. In this regard, electronic data of tax payments maintained by the Pakistan Revenue Automation Limited (PRAL) would be used to start process of verification after filing of income tax returns by the registered persons. Before filing of refund claims, the department would ensure verification of documents and issue refund claims without any delay due to electronic verification. During this process, the department would electronically verify the required documents before filing of income tax refund applications.
According to the FBR instructions issued to the LTUs/RTOs, representations have been received by the board that despite enforcement of e-filing of refund applications, refunds are not being issued within the stipulated time period, causing great grievances to the taxpayers. This not only causes difficulties to the taxpayers but also bring bad name to the income tax department.
It is essential that the requirement of law are adhered to while processing refund applications and necessary action for verification of tax payments in refund claim cases can be taken even before the receipt of refund applications. It is, therefore, necessary that the required process of verification should be initiated soon on receipt of "return of income". For verification purposes, electronic data of tax payments, as available with the PRAL may be used so as to complete the process of verification promptly, the FBR said.
All Chief Commissioners are, therefore, required to take stock of the situation regarding pendency of refunds and prompt action may be ensured in issuance of pending refunds, eliminating undue delays and taxpayers' grievances, FBR instructions added.