ISLAMABAD: The Fe­­d­eral Tax Ombudsman (FTO) has identified a systemic flaw in the Federal Board of Revenue’s (FBR) FASTER sales tax refund system and directed the tax authority to take imm­ediate corrective measures.

FTO Zafar Hijazi on Friday warned that the defect is adversely affecting exporters and undermining the automated refund mechanism. The ombudsman issued the order on complaints filed by Karachi-based exporter M/s Quality Towellers.

Mr Hijazi observed that the FASTER system cannot distinguish between commercial export Goods Declarations (GDs) and non-commercial sample export GDs. As a result, the system incorrectly raises the objection ‘GD Not Realised’ and diverts the taxpayer’s entire carry-forward refund claim to manual processing, rather than deferring only the proportionate amount as required under Sales Tax General Order No. 09 of 2023 and the Sales Tax Act 1990.

The ombudsman noted that exporters sending product samples through courier services are particularly affected because such consignments do not require realisation of export proceeds and are not eligible for sales tax refunds. However, these declarations are automatically populated in the IRIS sales tax return and cannot effectively be removed, creating unnecessary objections during refund processing.

During the proceedings, Pakistan Revenue Auto­m­ation Ltd (PRAL) informed the FTO that it only rec­e­i­ves export GD data from Pakistan Customs through an automated interface and has no legal or technical authority to alter or correct the information.

The FTO termed the issue a ‘systemic and hazardous loophole’ posing a threat to the export sector and directed FBR’s Inland Revenue and Customs Wings to jointly resolve the matter.

Published in Dawn, July 25th, 2026