President upholds decision on FBR’s Faceless Refund Regime

ISLAMABAD: President Asif Ali Zardari has upheld a decision recommending that the Federal Board of Revenue (FBR) operationalise a Faceless Refund Regime under section 170A of the Income Tax Ordinance, 2001, to ensure automated processing and electronic transfer of income tax refunds directly into taxpayers’ notified bank accounts.

The President has dismissed an FBR representation against an earlier decision in a case involving a pending income tax refund claim of Rs42.86 million for tax year 2025, while maintaining the recommendation that the Board prescribe an appropriate mechanism for introducing a faceless refund system.

The decision observed that while the FBR had already launched faceless customs clearance and assessment regimes, it should also operationalise the Faceless Refund Regime under Section 170A of the Income Tax Ordinance, 2001.

Under the proposed mechanism, refund amounts, to the extent of tax credits verified through the Board’s computerised system, would be sanctioned and electronically transferred into taxpayers’ notified bank accounts without requiring formal refund applications, the President’s order added.

When contacted, tax advisor Khurram Shahzad Butt said the move would reduce delays and improve taxpayer facilitation. He said delay constituted maladministration. He also referred to the Islamabad High Court’s directions in WP No. 2173/2023 for an automated refund mechanism under Section 170A, to minimize taxpayer interaction with tax offices and speed up refunds.

FBR has already launched faceless customs clearance and assessment regimes. It said the Board “may” likewise prescribe a mechanism under Section 170A. Refunds to the extent of tax credit verified by the Board’s computerized system would then go electronically into the taxpayer’s notified bank account, without a formal refund application, Shahzad Butt maintained.

FBR argued an appeal lay before the Commissioner (Appeals) under Section 170(5), and that the claim was still at the verification stage. Appealable nature of a matter cannot shield tax authorities from administrative delay, Khurram added.

Copyright Business Recorder, 2026