ISLAMABAD: Amid complaints of inordinate delays in the processing of tax refunds on various pretexts, the Federal Board of Revenue (FBR) on Thursday told a parliamentary panel that it was allowed under the International Monetary Fund (IMF) programme to hold up to Rs390 billion in tax refunds at any time.
The disclosure came after Senator Saleem Mandviwalla, who presided over a meeting of the Senate Standing Committee on Finance and Revenue, observed while discussing the complaints that under the new system, refunds were expected to be processed within 72 hours. He wondered why taxpayers had to wait for years to receive refunds.
The committee also discussed the withholding of legitimate income tax refunds by the FBR. A representative of an affected chemical company, Oleocorp, said the company produced top-quality glycerin that was exported to many countries, but had been struggling to secure refunds on taxes that were not even payable.
He said its tax refunds had remained pending for the last six years, with more than Rs270 million still outstanding.
Panel questions delays in refund payments
Committee members observed that delayed refunds adversely affected businesses’ cash flow and said the issue should be resolved amicably. At their insistence, FBR officials assured the committee that the matter would be resolved within one month.
The committee also directed the FBR to release the refunds and report back within 30 days.
Senator Talha Mahmood stressed the need to make the FBR more taxpayer-friendly and sought details of tax refunds for the last five years.
FBR officials said a new system had been introduced to reduce discretion and refunds were now being issued systematically on a first-in, first-out (FIFO) basis.
The officials also reported that refunds amounting to approximately Rs197bn had been issued during the first two months of the current fiscal year compared to Rs157bn during the corresponding period of the previous fiscal year, an increase of Rs40bn.
They said about Rs500bn in refunds were paid during the last fiscal year. Under an IMF-related condition, the FBR cannot retain refunds exceeding Rs390bn, an official said.
Senator Abdul Qadir observed that if a taxpayer received a refund after two years, it indicated that the refund was genuinely due. He called for punitive action against officials responsible for unnecessary delays in releasing refunds.
Minister of State for Finance and Railways Bilal Azhar Kayani told the committee that the payment of honoraria equivalent to five months’ basic salary to medical staff deployed during the budget session had been approved by the finance minister on Thursday on the basis of a list provided by the Senate finance committee.
He said the payments would be made within days and the Ministry of Finance and Revenue had already issued the requisite instructions in this regard.
The finance ministry had earlier been resisting the payment of honoraria to about 15 medical workers deputed at Parliament House during the budget session. The total amount involved was about Rs4.1m.
On the other hand, honoraria equivalent to up to six months’ salary are paid every year to thousands of officers and staff of various economic ministries, including finance and commerce, as well as the FBR and both houses of parliament.
The committee also received a briefing from the State Bank of Pakistan on the implementation of Foreign Exchange Circular No. 16 of June 24, 1999, regarding the payment of interest/profit on foreign currency accounts.
It postponed a detailed discussion after SBP Governor Jameel Ahmad said the matter was not only sub judice but also involved several complications that hampered the SBP’s intervention in an issue over which the bank and depositors had entered into signed contracts.
The committee directed the central bank to submit a written statement so that it could decide its future course and consider measures aimed at protecting foreign investment and depositor confidence.
Published in Dawn, September 11th, 2026