E-processing, e-issuance of refund: FBR still requires order by court or FTO’s recommendation

ISLAMABAD: In spite of insertion of section 170A in the Income Tax Ordinance 2001 through Finance Act 2021, the electronic processing and electronic issuance of refund by the Federal Board of Revenue (FBR) still requires a High Court order or a recommendation by the Federal Tax Ombudsman (FTO).

The section 170A deals with the electronic processing and electronic issuance of Refunds by the Board. The refund amount sanctioned under this section shall be electronically transferred to the taxpayer’s notified bank account.

A tax expert told Business Recorder that the FBR through its Circular No.2 of 2021 explained the said amendment. The relevant income tax circular stated that “to facilitate taxpayers, centralised automated refund system has been introduced where there will be no requirement for application and verification. The system based verified refunds would be issued directly into the bank account of the taxpayer without any face-to-face contact”.

Lahore based tax consultant Shahid Jami when contacted explained that amended law is not being followed by the FBR as the law has not changed the mindset of the Department.

Jami pointed out an instance that a taxpayer filed writ petition No.21973/2023 before Lahore High Court and the court through its order dated 03.04.2023 directed the Chairman FBR to decide the issue of refund under section 170A within two weeks. However, in spite of fallow up visits and written reminders there was no response. On that the taxpayer filed a contempt of court application and the High Court issued notice to the Chairman.

Only then the FBR has fixed the mater for face-to-face hearing treating the writ as a representation under section 7 of the FBR Act 2007. Jami observed that fixation of face-to-face hearing of such a simple proposition is not fair thinking especially when FBR circular states issuance of refund without any face-to-face contact.

Jami urged the Chairman FBR who enjoys good reputation amongst the taxpayers to implement section 170A in letter or spirit and this aspect does not require any support from the field formations as FBR holds all the data electronically. The present FBR team has collected record revenue in July -December 2023 and has surpassed the target but good grace has not been shown by issuing increased refunds under section 170A.

Jami pointed out that earlier Supreme Court in 2019 had directed that where there is claim of tax credit under section 65D and no amendment proceedings are initiated within 180 days then income tax collected under section 148 will be refunded within 30 days thereafter.

Court further observed that in case of failure to do so there may be action against the concerned Member FBR. Even in such cases the FBR has not prepared any database and there is no implementation at its own, Jami added.

Copyright Business Recorder, 2024