FBR Fails to Implement Court Order on Automated Tax Refund System

The Federal Board of Revenue (FBR) has failed to implement the Islamabad High Court’s (IHC) key directive for the establishment of an automated income tax refund system. Currently, Inland Revenue’s field formations are delaying refunds under the pretext of withholding tax verifications and other excuses. The IHC order, aimed at reducing taxpayer interaction with tax officials and streamlining the refund process, has seen no significant progress despite the considerable passage of time. A report titled Findings and Recommendations of the Committee for Effective Enforcement of Section 170A of the Income Tax Ordinance 2001 was submitted to the IHC, outlining a comprehensive implementation plan, but it has been ignored. When contacted, tax lawyer Waheed Shahzad Butt, who is representing the case, confirmed that the FBR has failed to act on the recommendations despite assurances from its Member (Policy). Butt expressed concern over the FBR’s inaction, particularly in light of the government’s broader push for digitalisation in tax administration. He highlighted that the failure to implement the automated refund system not only hampers transparency but also raises doubts about the FBR’s commitment to efficiency and judicial compliance. Field formations continue to play a “hide-and-seek” game with taxpayers under the pretext of withholding tax verification, even though every single penny is directly verifiable through the FBR’s own system, ITMS. Such deliberate obstruction not only reflects professional inefficiency but also exposes the rogue mindset of elements within the department who are intent on tarnishing the image of the FBR and its Chairman. Unless strict disciplinary proceedings are initiated against these delinquent officers, this culture of maladministration will persist, Waheed added. “Field formations are behaving like foreign rulers when it comes to returning taxpayers’ money in the shape of refunds and continue to play a hide-and-seek game with taxpayers under the pretext of withholding tax verification,” he accused. The FBR has yet to take concrete steps to ensure the enforcement of the IHC order. This continued attitude amounts to defiance of judicial directives and delivers a serious blow to the credibility of the institution. In its order, the IHC noted that the FBR had committed to implementing the recommendations under a proposed $25 million loan from the World Bank. The court observed that while the petition’s objective appeared to have been met in principle, the petitioner retained the right to approach the court again if the recommendations were not enforced.