Income tax refund is a reimbursement to a taxpayer of any excessive amount paid to the federal or a provincial government in Pakistan. Taxpayers tend to look at a refund as a bonus or a stroke of luck, but it most often represents an interest-free loan that the taxpayer made to the government and usually avoidable in most of cases.

ZA-LLP have many Legal experts who are very experienced to procure the refunds from the Income Tax Authorities. The relevant law, contain the provisions for issuance of refund, if Tax is paid in excess of the due amount or have been created as a result of appeal effect.

For the Income Tax, there is a provision of Section 170 of the Income Tax Ordinance 2001 which allows the tax payer, who has paid tax in excess of the amount which the taxpayer is properly chargeable under the Ordinance may apply to the Commissioner for the refund of the excess amount. There are many other situations where the excess amount is created and the tax payer, in all the situations can claim for the refund.

The procedure in respect of claiming the refund has been given in sub-section (2) of Section 170 that an application has to be given on the prescribed form which is to be verified in the prescribed manner and should be made within three (3) years of the date on which the Commissioner has issued the assessment order to the tax payer, for the tax year to which the refund application relates or the date on which the tax was paid.

When the Commissioner is satisfied that tax has been overpaid, the Commissioner can adjust or reduce the amount of refund by reducing the amount of other outstanding liability of the tax payer and can refund remainder to the tax payer. The Commissioner is obliged to refund the amount within sixty (60) days of the refund application and his decision can be challenged in appeal, in case the person is aggrieved of it.

The Board have made the rules regulating procedure for expeditious processing and automatic payment of refunds through centralize processing systems with effect from date to be notified by the board.

Where the refund due to the tax payer is not paid within three (3) months of the date on which it becomes due, the Commissioner shall pay to the taxpayer a further amount by way of compensation at the rate of KIBOR + 0.5% per annum, under S. 171, of the amount of the refund computed for the period commencing at the end of three (3) months period and ending on the date on which it was paid.

The refund also become due in consequence of appeal before the Commissioner (Appeals), appeal to the Appellate Tribunal, Reference to the High Court or an Appeal to the Supreme Court and a Revision order.

The application to the Commissioner can be made on the prescribed form given in Part VI of First Schedule of the Income Tax Rules 2002.

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