The Federal Tax Ombudsman has recommended that the Federal Board of Revenue introduce a faceless income tax refund system to enable electronic transfer of refunds directly into taxpayers’ bank accounts following automated verification of eligible claims. The recommendation was issued while deciding a complaint filed by Sprint Oil and Gas Services FZC, which had sought payment of an income tax refund amounting to Rs42.86 million for tax year 2025.
The company had submitted its online refund application on April 13, 2026, but the refund was not issued even after the legally prescribed 60-day period had lapsed. The petitioner argued that the delay constituted maladministration under the Federal Tax Ombudsman Ordinance, 2000, and cited an earlier Islamabad High Court order directing implementation of an automated refund system under Section 170A of the Income Tax Ordinance, 2001, aimed at minimizing taxpayer-officer interaction and expediting refund processing.
In response, the Chief Commissioner Inland Revenue at the Corporate Tax Office Islamabad stated that refund applications were being processed on a first-in, first-out basis in line with Federal Board of Revenue instructions, adding that scrutiny of the taxpayer’s claim was ongoing and that notices had been issued seeking required documentation. After reviewing the record, the Ombudsman held that the refund application had remained pending beyond the statutory timeframe, amounting to maladministration due to negligence and inattention by the department, and clarified that the first-in, first-out policy could not justify prolonged delays since administrative procedures cannot override the legal rights of taxpayers.
The Ombudsman directed the Federal Board of Revenue to instruct the Commissioner Inland Revenue for the Refund Zone at the Corporate Tax Office Islamabad to decide the pending refund claim in accordance with the law and submit a compliance report within 30 days. In a broader policy recommendation, the Ombudsman advised Federal Board of Revenue to operationalize a faceless income tax refund system under Section 170A of the Income Tax Ordinance, 2001, under which refunds verified through the Board’s computerized system could be transferred directly into taxpayers’ registered bank accounts without requiring a formal application, similar to the faceless customs clearance and assessment system already introduced by the tax authority. According to the Ombudsman, this measure would enhance system efficiency, reduce taxpayer grievances, and promote a more modern, technology driven tax administration.
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