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EconomyPositive · Buy biasBusiness Recorder

FBR barred from withholding refunds above Rs390bn under IMF agreement

The government, in line with IMF conditions, caps the Federal Board of Revenue’s outstanding tax refund stock at Rs390 billion, forcing faster refund processing and limiting delays for businesses.

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FBR barred from withholding refunds above Rs390bn under IMF agreement — Economy, Markets, Chemical | Shariah PSX

Desk Analysis

How This Affects the Exchange

Sector Effect

Positive · Buy bias

Faster tax refunds improve corporate cash flow, especially for chemicals and other listed firms – Buy bias.

Sectors & Direction

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Desk call: Buy bias · Positively affected

  • EconomyPositively affected
  • MarketsPositively affected
  • ChemicalPositively affected

Companies

ISL · Buy bias

Companies Mentioned

  • · Positively affected · Buy bias

Mentions in This Briefing

Sectors: Economy, Markets, Chemical — Positive · Buy bias. PSX tickers: ISL. Faster tax refunds improve corporate cash flow, especially for chemicals and other listed firms – Buy bias.

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## IMF‑linked cap on tax refunds

The federal government has accepted an International Monetary Fund (IMF) condition that limits the Federal Board of Revenue’s (FBR) pending tax‑refund stock to Rs390 billion. This effectively prevents the tax authority from holding back refunds beyond that ceiling.

## Senate Standing Committee briefing

Senior FBR officials disclosed the new ceiling while briefing the Senate Standing Committee on Finance and Revenue on Thursday. The committee, chaired by Saleem Mandviwalla, also reviewed tax‑refund procedures, sales‑tax issues on unsold jewellery, medical staff honoraria, and other fiscal matters.

## Refund volumes and new processing timeline

The FBR reported that Rs500 billion in refunds were paid during the last fiscal year. In the current fiscal year, around Rs197 billion had already been disbursed in the first two months – Rs40 billion more than the same period last year. The committee was informed that a new system now aims to process refunds within 72 hours, reducing discretionary delays.

## Business impact and pending cases

Representatives of a chemical company (identified as ISL) highlighted that its refunds, amounting to more than Rs270 million, have been pending for six years. The committee stressed that prolonged refunds strain corporate cash flow and directed the FBR to release the pending amounts within 30 days.

## Related regulatory updates

The committee also received a briefing from the State Bank of Pakistan on Foreign Exchange Circular No 16 (June 24 1999), which concerns interest/profit on foreign‑currency accounts and safeguards foreign investment. Additionally, the Jewellers & Gems Traders Association raised concerns over an 18 percent sales tax on unsold jewellery returned under the Self‑Consignment Export Scheme; the Ministry of Commerce will be invited to discuss a possible exemption.

## Outlook

With the IMF‑mandated cap, the FBR is expected to accelerate refund disbursements, improving liquidity for listed companies, especially those in manufacturing and chemicals that have historically faced delayed refunds.