FBR Chairman Orders Time-Bound Income Tax Refund Mechanism

Federal Board of Revenue (FBR) Chairman Rashid Mehmood Langrial has instructed officials to establish a time-bound process for handling and issuing income tax refunds after the Karachi Tax Bar Association (KTBA) raised concerns about delays affecting taxpayers.

The directive came during a meeting between the FBR chairman and KTBA office-bearers. According to the association, taxpayers who fulfil their tax obligations often lack a clear timeline for receiving refunds of excess taxes paid. The KTBA called for the timely resolution of both income tax and sales tax refund claims.

In response, Langrial directed the relevant officials to devise a mechanism with defined timelines to speed up the processing and issuance of income tax refunds.

The association also highlighted outstanding applications from taxpayers seeking revisions to their income tax returns to obtain refunds of taxes paid under Section 7E.

It urged the FBR to ensure the full implementation of instructions communicated through a letter dated September 23, 2026, to resolve these pending applications.

Regarding foreign investment, the KTBA called for streamlined procedures and the consistent enforcement of existing tax laws.

The association argued that non-resident taxpayers should not face compliance requirements beyond those explicitly stipulated by law. It also urged authorities to eliminate unnecessary procedural hurdles wherever possible.

The KTBA further expressed concerns over Sales Tax General Order No. 25/2026, which requires registered persons to issue prescribed stock transfer notes when moving goods between taxpayers' premises.

FBR officials acknowledged the practical challenges raised by the association and agreed to review the matter through internal consultations.

The meeting also addressed the retention of business equipment and records by tax authorities.

According to the KTBA, the FBR chairman recognised the difficulties businesses experience when their equipment and records remain in official custody and stressed that such items should be returned as soon as possible.

The association also called on the tax authority to uphold due process before launching coercive recovery proceedings involving advance income tax.

It maintained that taxpayers should receive a reasonable opportunity and adequate time to meet their obligations before recovery action is initiated.

Additionally, the KTBA highlighted delays in issuing notifications concerning income tax returns, recurring technical glitches on the FBR's IRIS portal, and difficulties faced by taxpayers and tax practitioners when uploading bulk data.