FBR allowed to retain Rs390bn in refunds, Senate committee told

Amid complaints of delays in tax refunds processing, the Federal Board of Revenue (FBR) informed a Senate committee that it can hold up to Rs390 billion in tax refunds under the IMF program at any given time. This disclosure came after Senator Saleem Mandviwalla raised concerns about the 72-hour expectation for refund processing instead of the years taxpayers often had to wait.

The committee also discussed the withholding of legitimate income tax refunds by the FBR. One affected chemical company, Oleocorp, reported that its tax refunds had been pending for six years, with Rs270 million still outstanding. FBR officials assured the committee that the matter would be resolved within a month. Senator Talha Mahmood stressed the need for taxpayer-friendliness and asked for details on tax refunds for the last five years.

FBR officials explained that a new system aims to issue refunds systematically on a first-in, first-out basis, with Rs197bn issued in the first two months of the current fiscal year, up from Rs157bn in the previous year. The FBR cannot retain refunds exceeding Rs390bn due to an IMF condition. Senator Abdul Qadir called for punitive action against officials responsible for delays in releasing refunds.

The finance minister approved payments for honoraria equivalent to five months' basic salary for medical staff deployed during the budget session, which would be made within days. The total amount involved was around Rs4.1m. The State Bank of Pakistan postponed a detailed discussion on Foreign Exchange Circular No. 16 of June 24, 1999, due to its complexity and involvement in signed contracts with banks and depositors.