The Federal Tax Ombudsman has directed the Federal Board of Revenue to ensure that recovery of Super Tax is carried out only after adjusting any pending tax refunds of the taxpayer.
Following the directive, FBR will issue instructions to all Inland Revenue field offices to first settle refund claims before initiating tax recovery actions.
The Ombudsman also ordered the Commissioner Inland Revenue of the Refund Zone at Faisalabad to process the complainant’s refund application for Tax Year 2024 strictly according to the law. The official has been directed to give the taxpayer a proper hearing and submit a compliance report within 45 days.
The case was filed under the Federal Tax Ombudsman Ordinance after a taxpayer complained about the non-issuance of an income tax refund worth Rs. 4.506 million. The taxpayer had filed the return under Section 114(1) of the Income Tax Ordinance 2001 and submitted an online refund application on August 13, 2025.
According to the complaint, the tax department did not process the refund within the legally required timeframe despite reminders sent in December 2025 and January 2026.
During the proceedings, it also emerged that the department had created a Super Tax demand of Rs. 1.548 million for the same tax year under Section 4C of the Income Tax Ordinance. The taxpayer requested that the refund amount be adjusted against this demand instead of paying the tax separately.
However, the department insisted on cash recovery of the tax demand, claiming it was informally following a policy of collecting Super Tax payments without allowing refund adjustments. Officials were unable to provide any legal basis for this practice.
The Ombudsman ruled that the taxpayer’s request to adjust the refund against the tax demand was reasonable. It concluded that the department’s refusal to do so and its insistence on cash payment amounted to maladministration and arbitrary conduct.
