An income tax refund is the amount a taxpayer has overpaid beyond their actual tax liability. According to Section 170 of the Income Tax Ordinance, 2001, taxpayers are eligible for refunds if they have:
- Paid more tax than required based on their declared income.
- Been subjected to advance tax deductions exceeding their total obligation.
- Had excess tax withheld from various sources such as salaries, bank profits, or property transactions.
The Federal Board of Revenue (FBR) has introduced electronic processing to simplify and expedite the refund process for eligible taxpayers.
Eligibility Criteria for an FBR Tax Refund
Before initiating a refund request, ensure you meet the following conditions:
✔ Registered Taxpayer – You must have an NTN (National Tax Number) or CNIC-based registration as an active filer.
✔ Tax Return Filed & Verified – Your tax return must be properly submitted and verified in the IRIS system.
✔ No Outstanding Liabilities – Any pending tax dues must be cleared before processing the refund. ✔ Excess Tax Paid – The tax paid must exceed your actual tax liability.
Step-by-Step Process to Apply for an FBR Tax Refund
Step 1: Gather the Required Documents
To streamline the refund process, prepare the following:
- Copy of your filed tax return for the relevant year.
- Bank account details for direct refund transfers.
- Tax deduction certificates from banks, employers, or business partners.
- Proof of excess tax payment, including bank challans and withholding tax certificates.
Step 2: Submit an Online Application via IRIS
The FBR’s IRIS system allows online submission of tax refund applications. Follow these steps:
- Log in to IRIS at https://iris.fbr.gov.pk.
- Navigate to “Refunds” → “Income Tax Refund Application.”
- Enter details such as tax year, refund amount, and attach required documents.
- Click Submit to forward your request to the Commissioner of Income Tax for review.
Step 3: Automatic Refund Processing
Since 2021, the FBR has started automated refunds for eligible taxpayers. This means that if your return is filed correctly and meets all conditions, your refund may be processed without a manual application.
Processing Timeline for Refunds
Once submitted, the refund process follows these key steps:
- Initial Review: The Commissioner of Income Tax assesses applications within 60 days.
- Adjustment Against Liabilities: Any outstanding dues are deducted from the refund.
- Disbursement Methods: Approved refunds are issued via:
- Bank Transfers (Electronic Refund Processing)
- Income Tax Refund Bonds (for refunds exceeding PKR 100,000)
Delayed Refunds: If the refund is not issued within 90 days, you are entitled to compensation at KIBOR + 0.5% per annum.
Alternative Refund Method: Income Tax Refund Bonds
Under Section 171A, refunds can be issued through Income Tax Refund Bonds with the following features:
✅ Maturity Period: 3 years
✅ Profit Rate: 10% per annum
✅ Tradable in Secondary Markets
Common Reasons for Refund Delays
Taxpayers may experience refund delays due to:
- Incomplete applications or missing documents
- Outstanding tax dues – refunds are first adjusted against pending liabilities.
- Discrepancies in declared income and tax deductions
- Incorrect or inactive bank account details
How to Track Your Tax Refund Status?
To check the status of your refund:
- Log in to IRIS.
- Navigate to “Refunds” → “Refund Status” to check processing progress.
- If the refund is approved but not received, contact the FBR Helpline (051-111-772-772).
The FBR has streamlined the income tax refund process with electronic applications and automatic processing. To ensure a smooth refund experience:
File your tax return accurately and within the deadline. Keep all supporting documents to validate excess tax payments. Update your bank details in the IRIS system to avoid transfer delays.
By following the step-by-step guide above, you can successfully claim your tax refund while complying with FBR regulations.
