The National Board of Revenue (NBR) is contemplating whether to introduce an automatic system for refunding excess taxes realised from taxpayers.

“We are thinking to send back the refund money directly to the taxpayer's bank account,” a senior NBR official told UNB.

But he said for this system, everything needs to come under the automated system.

The tax refund system in Bangladesh is governed by the National Board of Revenue (NBR) under the Income Tax Ordinance, 1984.

A tax refund arises when a taxpayer has paid more tax than their actual liability for a given fiscal year. Overpayments may occur due to excess tax deduction at source (TDS), advance tax payments, or miscalculation during tax assessments.

To claim a refund, an individual or organization must submit a formal application along with their annual income tax return (Form-IT-11Ga for individuals or Form-IT-11Gha for companies) within the assessment year.

Supporting documents, such as TDS certificates and payment challans, are required to verify the excess amount paid.

Once submitted, the concerned tax circle officer reviews the application. If the claim is found to be valid, the refund is processed and paid either through direct bank transfer or treasury cheque.

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However, the refund process in Bangladesh is often criticised for being time-consuming and bureaucratic.

Delays in processing, lack of automation, and limited taxpayer awareness contribute to low refund issuance rates. In many cases, taxpayers prefer to adjust the excess amount against future tax liabilities rather than await a refund.

To improve the system, the senior NBR official said that the NBR has taken steps to digitize tax return submissions and promote transparency.

The official said that the introduction of the Integrated Tax Administration System (ITAS) aims to streamline tax processes, including refunds, through electronic filing and tracking.

“Efficient tax refund mechanisms are essential for fostering taxpayer confidence and encouraging voluntary compliance,” he said.

He also mentioned that a transparent and prompt refund system would not only benefit individual taxpayers and businesses but also strengthen the overall tax culture in Bangladesh.

“Greater awareness campaigns and institutional reforms are needed to ensure that entitled refunds are processed fairly and timely,” he added.

The NBR official also said that when the total system will be automated without any intervention, it would be possible to make the tax refund directly.

“Taxpayers bank accounts will be connected with the Bangladesh Bank, when the designated officer approved the tax refund the money will be refunded automatically,” he said.

He also said that there will be no physical interaction in this process as the tax officials will examine everything through an interconnected system.

“But at present, the refund process is very complex issue in the country, and sometimes sone unethical matters get involved for this refund, we have to remove this,” he said.

The NBR senior official said that if the process can be made easy there is no problem to introduce that automatic refund system in the country to boost taxpayers confidence.

“We are earning some Tk 4 lakh as revenue, it would not be a matter for us if we refund genuinely Tk 500 crore to the taxpayers,” he said.