Consistent with the directive of the Federal Tax Ombudsman (FTO), the Federal Board of Income (FBR) will challenge directions to all Inland Income discipline formations, guaranteeing that restoration of Tremendous Tax is made solely after adjustment of pending refund claims.
The FTO has additional directed the Commissioner of Inland Income, Refund Zone, RTO Faisalabad, to get rid of the complainant’s refund software for Tax 12 months 2024 strictly in accordance with the legislation, after offering the taxpayer a correct listening to, and to report compliance inside 45 days.
The Ombudsman famous that the delay in processing the refund and the insistence on money restoration of the tax demand, regardless of the supply of a refund declare, constituted maladministration and arbitrary conduct on the a part of the division.
The grievance was filed underneath Part 10(1) of the Federal Tax Ombudsman Ordinance, 2000, in opposition to the non-issuance of an earnings tax refund amounting to Rs. 4.506 million for Tax 12 months 2024. The complainant had filed a return of earnings underneath Part 114(1) of the Earnings Tax Ordinance, 2001, claiming the refund, and subsequently e-filed the refund software on 13 August 2025.
Based on the complainant, regardless of submission of the applying and reminders dated 17 December 2025 and 6 January 2026, the division didn’t get rid of the refund software throughout the time prescribed underneath Part 170(4) of the Earnings Tax Ordinance, 2001.
Throughout proceedings, it was revealed that the division had additionally handed an order underneath Part 4C of the Earnings Tax Ordinance on 11 February 2026, making a tax demand of Rs. 1.548 million for a similar tax yr. The complainant requested that the refund quantity be adjusted in opposition to the demand to keep away from coercive restoration.
The departmental consultant knowledgeable that the division was informally pursuing a coverage of gathering Tremendous Tax demand via money cost with out permitting adjustment of refunds, however didn’t cite any authorized authority for such a observe.
The Ombudsman noticed that the taxpayer’s provide to regulate the refund in opposition to the demand for a similar tax interval was cheap, and that the division’s insistence on money restoration regardless of the existence of a refund declare quantities to coercion and harassment.
In its findings, the Federal Tax Ombudsman held that the division’s refusal to regulate the pending refund in opposition to the Tremendous Tax demand, and its insistence on money cost, was perverse, arbitrary, and discriminatory throughout the that means of Part 2(3)(i)(b) of the FTO Ordinance.