Deduction / Payment of Tax Chapter- 23
An verified application u/s 170 for a refund of tax shall be in the Performa specified in the Income Tax
Rules, 2002 and shall be accompanied by such documents, statements and certificates as specified
in the form, in the Ordinance and Income Tax Rules, 2002.
Additional payment for delayed refunds [Section 171]
Where a refund due to a taxpayer is not paid within 3 months of the date on which it becomes due,
the Commissioner Inland Revenue shall pay to the taxpayer a further amount by way of
compensation @ Kibor plus 0.5% per annum of the amount of the refund computed for the period
commencing at the end of the 3 months period and ending of the date on which it was paid.
Provided that where there is reason to believe that a person has claimed the refund which is not
admissible to him, the provision regarding the payment of such additional amount shall not apply till
the investigation of the claim is completed and the claim is either accepted or rejected.
A refund shall be treated as having become due-
(a) in case of a refund required to be made in consequence of an order on an appeal to the
Commissioner Inland Revenue (Appeals), an appeal to the Appellate Tribunal Inland Revenue,
a reference to the High Court or an appeal to the Supreme Court, on the date of receipt of such
order by the Commissioner Inland Revenue; or
(b) in case of refund required to be made as consequence of revision order u/s 122A, on the date
order is made by the Commissioner Inland Revenue ; or
(c) in any other case, on the date the refund order is made.
Explanation:- For the removal of doubts, it is clarified where a refund order is made on an application
under sub-section (1) of section 170, for the purpose of compensation, the refund becomes due from
the date refund order is made and not from the date the assessment of income treated to have been
made by the Commissioner under section 120.
31.1. Electronic processing and electronic issuance of Refunds by the Board [Section 170A]
Electronic processing and electronic issuance of Refunds by the Board.—Notwithstanding anything
contained in section 170 of this Ordinance, commencing from tax year 2021, the Board may process
and issue refund to the taxpayer who has filed the return of income without requiring refund
application by the taxpayer to the extent of tax credit verified by the Board’s computerized system as
may be prescribed. The refund amount sanctioned under this section shall be electronically
transferred in the taxpayer’s notified bank account.- Payment of refund through income tax refund bonds (U/S 171A)
1) Notwithstanding anything contained in sections 170 and 171, the income tax refunds payable
under this Ordinance may also be paid through income tax refund bonds to be issued by FBR
Refund Settlement Company Limited, in book entry form through an establishment licensed by
the Securities and Exchange Commission of Pakistan as a central depository under the Securities
Act, 2015 (III of 2015), in lieu of payment to be made through issuance of cheques or bank debit
advice.2) The Board shall issue a promissory note to FBR Refund Settlement Company Limited, hereinafter
referred to as the company, incorporating the details of refund claimants and the amount of
refund determined as payable to each for issuance of income tax refund bonds, hereinafter
referred to as the bonds, of the same amount.3) The bonds shall be issued in value in multiples of one hundred thousand rupees.4) The bonds so issued have maturity period of three years and shall bear annual simple profit at ten
percent.5) The bonds shall be traded freely in the country’s secondary markets.6) The bonds shall be approved security for calculating the statutory liquidity reserve.