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Payment of refund through income tax refund bonds
(1) Notwithstanding anything contained in sections 170 and 171, the income tax refunds payable under this Ordinance may also be paid through income tax refund bonds to be issued by FBR Refund Settlement Company Limited, in book-entry form through an establishment licensed by the Securities and Exchange Commission of Pakistan as a central depository under the Securities Act, 2015 (III of 2015), in lieu of payment to be made through issuance of cheques or bank debit advice.
(2) The Board shall issue a promissory note to FBR Refund Settlement Company Limited, hereinafter referred to as the company, incorporating the details of refund claimants and the amount of refund determined as payable to each for issuance of income tax refund bonds, hereinafter referred to as the bonds, of the same amount.
(3) The bonds shall be issued in value in multiples of one hundred thousand rupees.
(4) The bonds so issued have maturity period of three years and shall bear annual simple profit at ten percent.
(5) The bonds shall be traded freely in the country’s secondary markets.
(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. PART VII REPRESENTATIVES
(2) The Board shall issue a promissory note to FBR Refund Settlement Company Limited, hereinafter referred to as the company, incorporating the details of refund claimants and the amount of refund determined as payable to each for issuance of income tax refund bonds, hereinafter referred to as the bonds, of the same amount.
(3) The bonds shall be issued in value in multiples of one hundred thousand rupees.
(4) The bonds so issued have maturity period of three years and shall bear annual simple profit at ten percent.
(5) The bonds shall be traded freely in the country’s secondary markets.
(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. PART VII REPRESENTATIVES
Amendment history (5)
- Inserted by the Finance Act, 2003.
- Substituted for the figure “135” by the Finance Act, 2003.
- Added by the Finance Act, 2013.
- New Section 171A inserted through Finance Act, 2019.
- The words “local authority” substituted by the Finance Act, 2008.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
Source FBR PDF page 365
Unofficial reference, compiled from the FBR’s consolidated Income Tax Ordinance 2001 (amended up to 30 June 2026). Provided for general information only — not an official FBR publication and not legal or tax advice. Always verify against the official FBR text before relying on it for filing or any decision.