Automated income tax refund system: FBR has failed to enforce IHC’s directive

ISLAMABAD: The Islamabad High Court’s landmark judgment for effective enforcement of an automated income tax refund system remains unimplemented by the Federal Board of Revenue (FBR) despite assurances from Member (Policy) FBR

The court’s directive aimed to facilitate taxpayers and minimize interaction with tax functionaries, but the FBR has failed to take concrete steps in this regard.

According to tax lawyer Waheed Shahzad Butt, the FBR’s failure to enforce the court’s directive appears to be a case of “planned negligence,” allowing certain field formations within the department to continue obstructive practices when there is an issue of returning taxpayer money in the shape of tax refunds.

Automated income tax refund system: FBR fails to implement IHC judgement

Instead of embracing automation and transparency as directed by the IHC, some FBR officials are playing a hide-and-seek game with refund claimants. This deliberate inaction undermines taxpayer trust and perpetuates a corrupt manual culture that the court sought to eliminate.

The FBR demanded $25 million from the donor agency to effectively enforce an automated tax refund system under the ITO 2001. The FBR submitted a report titled “Findings and Recommendations of Committee for Effective Enforcement of Section 170A” before the IHC in a public interest petition.

Report submitted by the FBR revealed that the FBR’s e-portal had no direct electronic linkage with the biggest government withholding agents i.e. Accountant General Pakistan Revenues (AGPR), which deducted income tax on gross salary of the government employees. This is perhaps the most glaring impediment in the way of enforcement of automated tax refunds process.

Tax deducted by other withholding agents such as power distribution companies (Discos), excise and taxation departments, educational institutes, travel agents, airlines, Sui Northern Gas Pipelines Limited (SNGPL), Sui Southern Gas Company Limited (SSGCL), telephone and internet service providers, semi-autonomous government entities, government departments etc was not visible in the FBR’s database.

The judgment in question was intended to streamline the refund process through automated means, reducing human intervention and curbing discretionary power. However, despite the passage of time, the FBR has yet to roll out the mandated system, and no official explanation has been provided for the delay, Waheed Butt added.

Copyright Business Recorder, 2025