Income tax refunds’ e-processing: IHC issues notice to Member IR FBR

ISLAMABAD: The Islamabad High Court (IHC) has issued a notice to Member Inland Revenue (Policy) Federal Board of Revenue (FBR) to appear in person and explain the outcome of the committee for electronic processing of income tax refunds.

The FBR had constituted a committee for effective enforcement of Section 170A of the Income Tax Ordinance, 2001 for electronic issuance of income tax refunds by the board.

However, the IHC has noted with concern that the outcome of the committee’s deliberations is not in sight before the Court.

According to a short order of the IHC, the counsel for the respondent FBR stated that he has no further instructions in the matter, even though the order dated December 18, 2023 records that counsel was instructed by the FBR to convey to the Court that a committee for the enforcement of section 170 (A) had been constituted, but the outcome of the committee’s deliberations is not in sight before the Court. This necessitates the Court to hear the senior most relevant officer of the FBR.

The court order said notice be issued to Member (Policy) FBR to appear in person on the next date of hearing; i.e., May 27, 2024.

In December 2023, the FBR had constituted a committee for the resolution of pending income tax refunds and suggested reforms for the issuance of refunds electronically.

The FBR has issued terms of reference (TORs) of the committee for electronic processing of income tax refunds.

The section 170A deals with the electronic processing and the 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.

The committee shall suggest measures to remove inordinate delays in the issuance of pending income tax refunds and effect enforcement of Section 170A of the Income Tax Ordinance, 2001.

Moreover, the committee shall adhere to the TORs as mentioned in the judgment issued by the IHC vide WP No 21731 2023 as follows: The TORs of the Refund Resolution Committee as enunciated by the IHC shall be as follows: (i) Review and examine refund applications that have not been disposed of by field formations within the legally mandated timeframe; (ii) Committee will propose reforms aimed at eradicating the delay in processing pending refund applications.

These reforms will be based on a comprehensive analysis and will include suggestions for improving the conduct of officials, among other recommendations; (iii) Committee will additionally provide suggestions regarding prompt resolution of refund application under Section 171 of the Income Tax Ordinance, 2001 encompassing guidelines for compensation eligibility; (iv) Committee shall develop the necessary Change Request Form (CRF) blue-print for the development of essential software; and (v) Committee shall furnish its findings/recommendations within a time frame of 45 days.

Copyright Business Recorder, 2024