The Federal Tax Ombudsman has recommended that the Federal Board of Revenue (FBR) introduce a faceless income tax refund system to modernise Pakistan’s tax administration and accelerate refund processing through automation. The proposal aims to enable verified income tax refunds to be transferred electronically into taxpayers’ registered bank accounts without requiring manual intervention, supporting the government’s broader efforts to expand digital public services and improve administrative efficiency.
The recommendation was issued while deciding a complaint filed by M/s Sprint Oil & Gas Services FZC regarding an income tax refund of Rs42.86 million for the tax year 2025. According to the case record, the company submitted its online refund application on April 13, 2026, but the payment was not processed even after the legally prescribed 60-day period had expired. The delayed processing prompted the company to seek relief from the Federal Tax Ombudsman, arguing that the prolonged wait violated its legal rights under Pakistan’s tax framework.
In its complaint, the company maintained that the delay amounted to maladministration under the Federal Tax Ombudsman Ordinance, 2000. The petitioner also referred to an earlier Islamabad High Court directive that called for the implementation of an automated refund mechanism under Section 170A of the Income Tax Ordinance, 2001. According to the petitioner, such a system would significantly reduce direct interaction between taxpayers and tax officials while ensuring faster, more transparent and technology-enabled refund processing.
During the proceedings, the Chief Commissioner Inland Revenue at the Corporate Tax Office (CTO) Islamabad informed the Ombudsman that refund claims were being processed according to the Federal Board of Revenue’s first-in, first-out (FIFO) policy. The department stated that the taxpayer’s refund application was still under examination and that notices had been issued requesting additional documentation required for verification before releasing the refund.
After examining the available record, the Federal Tax Ombudsman concluded that the refund application had remained pending beyond the statutory period prescribed under the law. The Ombudsman determined that the delay constituted maladministration resulting from negligence and administrative inattention. The ruling further clarified that internal administrative procedures, including the FIFO policy, cannot override the legal rights granted to taxpayers under existing tax laws. According to the decision, administrative practices cannot be used as justification for delaying refunds beyond the timeframe established through legislation.
The Ombudsman directed the Federal Board of Revenue to instruct the Commissioner Inland Revenue at the Refund Zone of the Corporate Tax Office Islamabad to decide the pending refund application strictly in accordance with the law. The authority was also instructed to determine the nature of the tax paid or deducted, complete the required legal process and submit a compliance report within 30 days.
Beyond resolving the individual complaint, the Ombudsman made a broader policy recommendation aimed at improving Pakistan’s digital tax infrastructure. The recommendation calls for the operationalisation of a faceless income tax refund system under Section 170A of the Income Tax Ordinance, 2001. Under the proposed framework, refund claims verified through the Federal Board of Revenue’s computerised systems would be processed automatically and transferred directly into taxpayers’ registered bank accounts without requiring a separate refund application. The proposed approach mirrors the faceless customs clearance and assessment system that has already been introduced by the tax authority for customs operations.
According to the Ombudsman, implementing an automated refund mechanism would improve operational efficiency, minimise taxpayer complaints and strengthen confidence in Pakistan’s digital tax administration. A technology-driven refund process could also reduce processing times, improve transparency and limit unnecessary interaction between taxpayers and tax officials. As Pakistan continues to expand digital governance across public institutions, the proposed faceless refund system represents another step toward using technology to streamline tax administration while protecting taxpayer rights through faster and more transparent service delivery.
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