Income Tax Ordinance, 2001 — Section 171: Additional payment for delayed refunds

171. Additional payment for delayed refunds.—(1) Where a refund due to a taxpayer is not paid within three 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 4[ 5[KIBOR plus 0.5 per cent] ] per annum of the amount of the refund computed for the period commencing at the end of the three month period and ending on the date on which it was paid 6[:] 7 [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.]

(2)For the purposes of this section, a refund shall be treated as having become due 1 Sub-section (5) substituted by the Finance Act, 2003. The substituted sub-section (5) read as follows: “(5) A person dissatisfied with a decision referred to in sub-section (4) may challenge the decision only under Part III of this Chapter.” 2 New sub-section (6) added through Finance Act, 2020 dated 30th June,2020 3 Section 170A inserted by the Finance Act, 2021. 4 The word “KIBOR” substituted by the Finance Act, 2012. 5 The word “fifteen” substituted by Finance Act, 2015. 6 Full stop substituted by the Finance Act, 2009. 7 Inserted by the Finance Act, 2009. 355 Chapter X – Procedure

(a)in the case of a refund required to be made in consequence of an order on an appeal to the Commissioner (Appeals), an appeal to the Appellate Tribunal, a reference to the High Court or an appeal to the Supreme Court, on the date of receipt of such order by the Commissioner; 1[or]

(b)in the case of a refund required to be made as a consequence of a revision order under section 2[122A], on the date the order is made by the Commissioner; or

(c)in any other case, on the date the refund order is made. 3 [Explanation.—For the removal of doubt, it is clarified that 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.] Chapter X – Procedure

(4)The bonds shall be approved security for calculating the statutory liquidity reserve.

(5)The bonds shall be accepted by the banks as collateral.

(6)There shall be no compulsory deduction of Zakat against bonds and Sahib-e-Nisab may pay Zakat voluntarily according to Shariah.

(7)After period of maturity, the company shall return the promissory note to the Board and the Board shall make the payment of amount due under the bonds, along with profit due, to the bond holders.

(8)The bonds shall be redeemable in the manner as in sub-section (9) before maturity only at the option of the Board along with simple profit payable at the time of redemption in the light of general or specific policy to be formulated by the Board.

(9)The refund under sub-section (1) shall be paid in the aforesaid manner to the claimants who opt for payment in such manner.

(10)The Federal Government may notify procedure to regulate the issuance, redemption and other matters relating to the bonds, as may be required.] 357 Chapter X – Procedure PART VII REPRESENTATIVES