ISLAMABAD: The Federal Tax Ombudsman (FTO) has urged the Federal Board of Revenue (FBR) to launch a Faceless Income Tax Refund System to enable the automated processing of eligible tax refunds for direct electronic transfer into taxpayers’ bank accounts.
The ombudsman recommendation came while deciding a complaint filed by M/s Sprint Oil & Gas Services FZC, which sought the release of an income tax refund of Rs42.86 million for tax year 2025.
The FTO said the move would reduce delays and improve taxpayer facilitation.
The company had submitted its online refund application on April 13 this year, but alleged that the refund remained pending despite the expiry of the statutory 60-day processing period.
FTO directs decision on pending refund claim in accordance with law
According to the complaint, the delay constituted maladministration under the Federal Tax Ombudsman Ordinance, 2000. The complainant also referred to an Islamabad High Court directive calling for the implementation of an automated refund mechanism under Section 170A of the Income Tax Ordinance, 2001, to minimise taxpayer interaction with tax offices and speed up refund payments.
The chief commissioner of Inland Revenue, Corporate Tax Office (CTO), Islamabad, stated that refund applications were being processed on a first-in, first-out (FIFO) basis under FBR instructions and that the taxpayer’s claim was still under verification after notices were issued seeking supporting documents.
Ombudsman Zafar Hijazi ruled that the refund application had remained pending beyond the statutory timeframe and that such delay amounted to maladministration due to departmental neglect and inattention.
The FTO rejected the department’s reliance on the FIFO policy as a justification for prolonged delays, observing that administrative procedures cannot override taxpayers’ legal rights.
The FTO directed the FBR to instruct the CTO commissioner to decide the pending refund claim in accordance with the law after determining the nature of the taxes paid or deducted and submit a compliance report within 30 days.
The ombudsman advised the FBR to operationalise the Faceless Income Tax Refund System under Section 170A of the Income Tax Ordinance, 2001.
The proposed system would allow refunds, verified through the board’s computerised system, to be transferred electronically into taxpayers’ notified bank accounts without requiring formal refund applications, similar to the faceless customs clearance and assessment regimes already introduced by the FBR.
Published in Dawn, August 1st, 2026
