FBR Seeks World Bank Funding for Tax Refund System Upgrade

The Federal Board of Revenue (FBR) has formally requested $25 million in funding from the World Bank to improve the implementation of an automated tax refund system in accordance with the Income Tax Ordinance (ITO) 2001. This request was submitted as part of a report presented to the Islamabad High Court (IHC) in response to a public interest petition.

The report emphasized the necessity of enforcing Section 170A of the ITO-2001 to streamline the tax refund process without direct FBR officer involvement. It was noted that the FBR's e-portal lacked electronic connectivity with major government withholding agents, leading to difficulties in verifying tax deductions at the source.

One of the key challenges identified was the lack of taxpayer verification of tax deductions by various withholding agents, such as government bodies, power distribution companies, and educational institutions. This hindered the smooth operation of the automated tax refund system. Additionally, the FBR's database did not capture tax deductions made by these entities, further complicating the verification process.

The Islamabad High Court recognized the thoroughness of the report and the FBR's commitment to implementing the proposed solutions with the assistance of the anticipated $25 million loan from the World Bank. The court closed the case, satisfied with the progress made, but also allowed the petitioner the option to seek legal action if the recommendations are not executed despite meeting the World Bank's loan terms.

The FBR's initiative to enhance the tax refund system through technological advancements and external funding signifies a step towards greater efficiency and transparency in tax administration. With the support of international organizations like the World Bank, Pakistan aims to modernize its tax processes for the benefit of both taxpayers and the government.