FBR Sets Timelines To Clear Delayed Tax Refunds

The Federal Board of Revenue (FBR) has introduced a stage-wise timeline for processing deferred sales tax refund claims, directing its field formations to resolve pending cases and prevent further accumulation of refunds under the FASTER system.

The decision comes after continued delays in refund claims that were deferred by FASTER after completing the required validation checks but remained pending with field offices, mainly due to missing documentation and delays in subsequent processing.

Under the new procedure, FASTER will issue a deferred memo to both the taxpayer and the relevant field office after 12 validation checks or cycles have been completed. The field office will then be required to ask the taxpayer to provide the necessary documents within seven days.

If the taxpayer does not respond within the prescribed period or submits incomplete documentation, the department will issue an objection memo followed by reminders. Continued failure to comply may result in proceedings for the issuance of a show-cause notice.

The revised process also requires refund claims to be replicated and verified through the STARR system before they can be processed and forwarded to the sanctioning officer. The examination and approval of eligible refunds, issuance of Refund Payment Orders (RPOs) and show-cause notices will likewise be subject to specified timelines.

The FBR has instructed all Chief Commissioners Inland Revenue to strictly implement the new schedule, stating that the measures are intended to speed up deferred refunds and address taxpayers’ concerns regarding prolonged delays.

Refund applicants will be required to submit a prescribed set of records, including their sales tax registration number and NTN, sales and purchase invoices, import and export Goods Declarations, monthly tax returns with annexures, bank account details, sales registers and documents demonstrating compliance with Section 73.

The officer responsible for receiving or processing a refund claim will verify whether all required documents are available when the file is received and record any missing information or deficiencies.

The FBR clarified that these timelines will not apply to refund claims involving excess carry-forward amounts or input tax carried forward under Section 8B of the Sales Tax Act, 1990.