FBR barred from retaining tax refunds above Rs390bn under IMF condition
✧ GENERATE BRIEFING +
The Federal Board of Revenue has been barred from retaining outstanding tax refunds above Rs390 billion under an agreement with the International Monetary Fund, officials disclosed during a Senate Standing Committee on Finance and Revenue meeting chaired by Senator Saleem Mandviwalla in Islamabad. The restriction aims to prevent an excessive backlog of unpaid claims. FBR reported disbursing approximately Rs197 billion in refunds during the first two months of the current fiscal year, up from Rs157 billion previously, following a prior-year total of Rs500 billion. Lawmakers raised concerns over delayed business liquidity, highlighting a case where Oleocorp faced a six-year delay on over Rs270 million in claims, prompting a one-month deadline for resolution. Additionally, the committee addressed an 18 percent sales tax on unsold jewellery returned under the Self-Consignment Export Scheme, planning further review with the Ministry of Commerce.
ISLAMABAD: The Federal Board of Revenue (FBR) has been restricted from retaining outstanding tax refunds above Rs390 billion under a condition agreed with the International Monetary Fund (IMF), officials told the Senate Standing Committee on Finance and Revenue.
The disclosure came during a committee meeting chaired by Senator Saleem Mandviwalla, where lawmakers examined complaints regarding delays in the payment of legitimate income tax refunds. Officials said the agreed ceiling was intended to prevent the tax authority from accumulating an excessive backlog.
The FBR informed the committee that it had disbursed approximately Rs197 billion in tax refunds during the first two months of the current fiscal year, compared with Rs157 billion during the same period last year. The latest figure represents an increase of Rs40 billion.
Officials also stated that the tax authority paid around Rs500 billion in refunds during the previous fiscal year. Under the IMF-related arrangement, the FBR is not permitted to retain refunds exceeding Rs390 billion, placing greater pressure on the department to process eligible claims without prolonged delays.
The committee raised concerns over the impact of delayed refunds on business liquidity. Representatives of chemical exporter Oleocorp reportedly informed lawmakers that more than Rs270 million in refunds had remained unpaid for six years. The committee directed the FBR to resolve the matter within one month and submit a progress report within 30 days.
FBR officials said a new refund-processing mechanism had been introduced to reduce discretionary intervention. Under the system, refund claims are processed sequentially on a first-in, first-out basis. The committee nevertheless called for stronger accountability against officials responsible for unnecessary delays and urged the tax machinery to adopt a more taxpayer-friendly approach.
The meeting also covered the treatment of unsold jewellery returned under the Self-Consignment Export Scheme. Jewellery exporters argued that an 18% sales tax imposed on returned unsold gold and jewellery created an additional burden. The committee decided to invite the Ministry of Commerce to a future meeting to examine the issue and seek a resolution.
