ISLAMABAD: The Federal Board of Revenue (FBR) has yet to roll out the automated income tax refund system ordered by the Islamabad High Court (IHC) under Section 170A of the Income Tax Ordinance, 2001. No budgetary provision for the project appears in the FBR’s annual procurement plan, raising concerns among tax professionals.
Court’s Aim: Transparency and Reduced Direct Contact
The IHC had instructed the tax authority to introduce an automated process to speed up refunds and minimise direct dealings between taxpayers and officials. To support the initiative, the court reviewed a detailed report, “Findings and Recommendations of Committee for Effective Enforcement of Section 170A”, which outlined technical and procedural steps for implementation.
Assurances vs. Action
While FBR’s Member (Policy) previously assured that the system would be introduced, industry insiders say no concrete steps have been taken. Tax experts warn that the lack of progress runs counter to the government’s broader agenda of digitising tax operations, potentially weakening public trust in the system.
International Funding Highlighted in Court
During proceedings, the IHC observed that the FBR’s plan appeared thorough and could be executed with the help of a USD 25 million loan from an international donor. The court closed the case but allowed the petitioner to return if the directives were not acted upon.
Broader Implications for Tax Reform
The delay raises questions about the FBR’s commitment to modernising Pakistan’s tax administration. Stakeholders say an automated refund system is crucial for improving efficiency, ensuring transparency, and reducing opportunities for bureaucratic delays or malpractice.
