FBR seeks $25m World Bank loan for automated tax refund system

The Federal Board of Revenue (FBR) demanded $25 million from the World Bank to effectively enforce an automated tax refund system under the Income Tax Ordinance (ITO) 2001, sources said on Sunday.

According to them, the FBR submitted a report titled ‘Findings and Recommendations of Committee for Effective Enforcement of Section 170A [of the ITO-2001] before the Islamabad High Court (IHC) in a public interest petition.

Petitioner Khurram Shahzad Butt told this correspondent that Member (Policy) FBR personally appeared before IHC and stated that recommendations for effective enforcement of Section 170A would be implemented in accordance with the $25 million loan expected to be provided by the World Bank.

The petitioner moved the IHC against the FBR and its field formations for “their negligence and long silence” to implement the law enacted by parliament to issue refunds without personal involvement of the FBR officers.

The report submitted by FBR revealed that the FBR’s e-portal had no direct electronic linkage with the biggest government withholding agent ie Accountant General Pakistan Revenues (AGPR), which deducted income tax on gross salary of the government employees.

FBR’s e-portal is also not integrated with government’s withholding agents, reflecting serious issues in verification of tax deducted at source. Meaning that there was an inadequacy of taxpayers’ verification of tax deducted at source by various withholding agents.

This is perhaps the most glaring impediment in the way of enforcement of automated tax refunds process, according to the petitioner.

Tax deducted by other withholding agents such as power distribution companies (Discos), excise and taxation departments, educational institutes, travel agents, airlines, Sui Northern Gas Pipelines Limited (SNGPL), Sui Southern

Gas Company Limited (SSGCL), telephone and internet service providers, semi-autonomous government entities, government departments etc was not visible in the FBR’s database.

“The [FBR] report and recommendations appear fairly comprehensive, and the Member (Policy) appearing today has stated that these recommendations will be implemented in accordance with the US$ 25 million loan expected to be provided by the World Bank,” the IHC order said. “Objective of this petition seems to have been achieved,” it added.

“The petition is accordingly disposed of, leaving it open for the petitioner to approach the Court again if the recommendations are not implemented despite the World Bank’s loan conditionalities being met by the Government,” the IHC ordered.