VAT refunds pile up as NBR's online system stalls

Hundreds of businesses are facing liquidity challenges as thousands of crore taka in value-added tax (VAT) and supplementary duty refunds remain trapped with the National Board of Revenue, months after its online refund system effectively ground to a halt.

Infographic: TBS

The tax authority launched the system in November 2025, promising hassle-free online processing and swift disbursements. Although businesses were told that refunds would be processed within days of applications, payments have stalled.

Official documents obtained by The Business Standard show Tk4,186 crore in VAT and supplementary duty refunds owed to around 1,500 businesses, while industry insiders estimate that more than 8,000 firms are awaiting around Tk14,000 crore in refunds.

The backlog involves major business groups, including BSRM, DBL Group, Abul Khair, Bashundhara, Square Textiles and TK Group, as well as hundreds of small and medium-sized enterprises.

The NBR has attributed the delay to an update of the software module used for processing VAT refunds. A senior NBR official said the refund process will resume within the next two months, while another official said a 30-point checklist is being prepared to prevent fraudulent claims.

Large sums remain locked up
BSRM, one of the country's leading steel manufacturers, has around Tk300 crore in income tax refunds outstanding, according to company officials. The amount has remained unpaid for years despite repeated efforts by senior company executives to resolve the issue, they said.

Shekhar Ranjan Kar, head of finance and accounts at BSRM, said, "People do business for what – to have their money blocked?"

He said the money had been stuck for five to six years and declined to elaborate further, referring additional questions to the NBR.

An analysis of the refund list shows that at least five companies belonging to TK Group are owed around Tk164 crore in VAT refunds, with Samuda Chemical Complex accounting for the largest amount.

Nasim Anwar, financial adviser to Samuda Chemical Complex, said some of the company's refunds had been stuck for six to seven years.

"When the online refund system was introduced last year, we were told the claims would be processed within a short time. But even after such a long period, we are still being told that the refunds cannot be processed," he said.

The delays are tying up working capital while companies continue to incur interest on bank loans, he said.
"If we could keep this money in our business, we would have earned a profit from it. We have been deprived of that as well. The financial loss is around Tk80 crore," Anwar said.

DBL Group Managing Director MA Jabbar said the issue had recently been raised at a meeting of the prime minister's advisory committee.

TBS also spoke to eight other business representatives whose companies appeared on the refund list. They declined to be named, fearing that disclosure of their identities could lead to further difficulties with NBR officials.

All of them said delays in receiving refunds are increasing their cost of doing business.

Online system fails to deliver promised speed
Applications for refunds have been suspended while the software is being updated, officials said.

The problem extends beyond VAT and supplementary duty. Businesses are also owed substantial amounts in income tax, customs duty and duty drawbacks, although the total value of those claims could not be established from the relevant departments.

TBS sought information on the amounts from the NBR in writing, but no response had been received before this report was filed.

Officials responsible for VAT at the NBR said the refund issue would be resolved within the next one to two months. They did not explain why the problem had remained unresolved for the past nine months.

Businesspeople said some refunds had been stuck with the NBR for six years or more. Even after field-level VAT offices approved payments, they said, the NBR had held them back on various grounds.

The issue has recently been brought to the attention of senior government officials, they added.

Software update or bureaucratic delay?

NBR officials said businesses that are already entitled to refunds, as well as those seeking to submit new claims, are being affected because the online software module is taking time to update.

Some NBR officials are seeking a quick resolution, while others are taking a more cautious approach, according to officials familiar with the matter.

A businessman, speaking on condition of anonymity, said his company had around Tk150 crore in refunds approved by field-level VAT offices.

He alleged that the process was being delayed in the name of testing the online software and adding new conditions.
Syed Mushfequr Rahman, NBR member for VAT implementation and IT, said, "The refund process will start within the next two months. Necessary activities are underway for this."
Another NBR official, speaking on condition of anonymity, said a checklist of around 30 points had been prepared to prevent companies from obtaining refunds using fake documents or false information.

"The field-level offices will approve refunds after confirming those points," he said.

The official added that the NBR is trying to ensure that no one can obtain refunds through irregular means.

Businesspeople, however, said preventing irregularities was the NBR's responsibility and questioned why it should take so long to resume legitimate refund payments.

'Obstacle to ease of doing business'
Fazlul Hoque, administrator of the Federation of Bangladesh Chambers of Commerce and Industry, said refunds should be paid in line with the NBR's commitment.
"There is no justification for taking so long in the name of fixing the software," he said.

He said prolonged delays in refunds are tying up businesses' working capital and increasing their operating costs.

"These incidents are an obstacle to ease of doing business," Hoque said, adding that confidence in the NBR would also decline.

Professor Mustafizur Rahman, an economist and distinguished fellow at the Centre for Policy Dialogue, said the online refund system has been a positive initiative.

However, he said the delay has complicated the initiative and pointed to shortcomings in compliance within the NBR.

"Digitisation was supposed to reduce harassment. Instead, delays are increasing it, which is an obstacle to ease of doing business," he said.

He said proper oversight should be in place to prevent fraudulent refund claims based on false information and that officials responsible for irregularities should be held accountable.

Lutfor Rahman, a former NBR member, said artificially holding back refunds would undermine taxpayers' confidence in the government's newly announced refund provisions.
"If the NBR wants compliance from businesses, it must first practise compliance itself," he said.