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FBR to release Rs10bln income tax refunds


May 31, 2020

KARACHI: The finance ministry has released Rs10 billion for the payment of stuck up income tax refunds as part of government’s efforts to shore up lockdown-affected taxpayers, officials said on Saturday.

"… the government has initially provided Rs10 billion to the Federal Board of Revenue (FBR) for sanctioning income tax refunds to the taxpayers, as per law, in a transparent and automated manner,” a FBR communique said.

Officials said the FBR has decided to liquidate up to Rs5 million claims from the fund released by the finance ministry.

“Pending income tax refunds already prepared and kept in draft mode in Iris by the relevant officers where the amount of Rs5 million (cumulatively) has to be liquidated at this stage,” the FBR directed the tax departments. It further explained that cumulatively means the total amount of refund in respect of a taxpayer (for the tax year 2014 to 2019) duly processed and sanctioned under the law.

The FBR also directed the chief commissioners that bank-wise (with IBAN numbers) and taxpayers-wise lists of cases ripe for the sanctioning of income tax refunds up to Rs5 million should be dispatched by May 31, 2020.

“Since the entire process of refund issuance under the Prime Minister’s COVID-19 package had to be carried out electronically, by disbursal of refunds through the AGPR, no manual issuance of income tax refunds is allowed till further orders,” it said. The tax departments i.e. Large Taxpayers’ Units (LTUs) and Regional Tax Offices (RTOs) had completed the process of verification of refund claims and total verified claims for income tax refunds amounted to Rs62 billion.

The tax offices submitted the details of taxpayers’ claims last month.

The tax authorities had already released repayments of around Rs100 billion, including refund payment of sales tax and duty drawback.

The emergency cash transfer of tax refunds was made to dilute the impact of coronavirus after the lockdown in the country faced by the trade and industry.

The sources said the decision to release Rs5 million initially as income tax refund was to support industries in the payment of salaries and wages.

The tax machinery, at the moment, was not giving importance to the revenue collection, they said, adding that instead it would be the first time in the FBR history that the tax machinery during the last month was engaged in the payment of tax refunds.

The FBR has managed to clear the pendency of refund claims in both direct and indirect taxes. In the past, the tax authorities were blamed for holding refund claims to show improved revenue collection growth.

The sources said only those claims were pending, which were either disputed or where taxpayers failed to produce evidence.