FBR allowed to retain up to Rs390bn in tax refunds under IMF programme, Senate panel says
The Federal Board of Revenue disclosed it can hold back Rs390 billion in tax refunds, prompting Senate lawmakers to demand faster releases after businesses reported multi‑year delays.
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Desk Analysis
How This Affects the Exchange
Sector Effect
Negative · Do not buy
Delayed tax refunds hurt cash flow of exporters and listed companies, leading to a negative bias – avoid buying until clarity on refunds.
Sectors & Direction
Desk read
Desk call: Do not buy · Negatively affected
- EconomyNegatively affected
Companies
Companies Mentioned
- ISL· Negatively affected · Do not buy
Mentions in This Briefing
Sectors: Economy — Negative · Do not buy. PSX tickers: ISL. Delayed tax refunds hurt cash flow of exporters and listed companies, leading to a negative bias – avoid buying until clarity on refunds.
Full Story
Open on Dawn## Senate panel raises concerns over tax refund delays
The Senate Standing Committee on Finance and Revenue heard that the Federal Board of Revenue (FBR) is permitted, under the IMF programme, to retain up to Rs390 billion in tax refunds at any time. Senators questioned why refunds that should be processed within 72 hours were taking years for some taxpayers.
## Companies cite cash‑flow strain
A representative of Oleocorp, a chemical exporter that supplies glycerin to multiple markets, told the committee that its legitimate tax refunds have been pending for six years, with more than Rs270 million still unpaid. The company said the delay is harming its working capital.
## FBR response and recent refund trends
FBR officials explained that a new FIFO‑based system has been introduced to reduce discretion in refund processing. They reported that refunds of about Rs197 billion were issued in the first two months of the current fiscal year, up from Rs157 billion in the same period last year – a rise of Rs40 billion. Overall, roughly Rs500 billion was paid out in refunds during the previous fiscal year.
## Senate directives
The committee directed the FBR to release the pending refunds and report back within 30 days. Senators also called for punitive action against officials responsible for unnecessary delays and urged the FBR to become more taxpayer‑friendly.
## Related parliamentary matters
During the same session, Minister of State for Finance and Railways Bilal Azhar Kayani confirmed approval of honoraria for medical staff deployed during the budget session, amounting to about Rs4.1 million. The committee also received a briefing from the State Bank of Pakistan on foreign‑exchange circulars, with the SBP governor indicating further discussion would be postponed due to legal complexities.
## Outlook
The FBR’s ability to withhold a large pool of refunds under IMF conditions adds uncertainty for businesses that rely on timely cash inflows, potentially dampening investor confidence in sectors with high export exposure.