To delight of businesses, NBR rolls out e-VAT refunds today
The National Board of Revenue (NBR) has taken a long-awaited step towards digitising tax refunds, moving away from the slow, manual process that businesses have long criticised as cumbersome and corruption-prone.
Starting today, VAT refunds will be credited directly to taxpayers' bank accounts through the e-VAT system, according to an NBR notice. Refunds for other taxes, including income tax and customs duties, will be brought under the online system in phases.
Businesses have welcomed the move, saying a fully functional online refund mechanism could save time, reduce harassment, and cut additional costs associated with repeated visits to tax offices.
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Under the new platform, businesses will be able to apply for and receive excess VAT refunds online within 10 working days, without physically visiting NBR officials, according to businesses, tax experts, and NBR officials.
Thousands of crores stuck in refunds
NBR sources said that as of September 2025, VAT refunds amounting to Tk1,466 crore had been created under the VAT wing alone, a significant portion of which has remained unpaid for years.
While there is no consolidated data on refunds generated under the Income Tax and Customs wings, officials estimate the amount could run into several thousand crore taka.
Businesses have long complained that although refunds are legally due, disbursement is routinely delayed. Most VAT refunds are generated for commercial importers, who pay Advance Tax (AT) at the import stage. After reconciliation, if the actual VAT payable is lower than the AT deducted, the excess amount becomes refundable.
However, claiming these refunds has traditionally been a lengthy and costly process, often requiring repeated visits to tax offices.
According to the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), there are around 6,000 commercial importers in the country, many of whom regularly generate refundable amounts.
Speaking on condition of anonymity, a Dhaka-based businessman told The Business Standard, "It can take three years or even longer to get a refund, and nearly 20% of the amount ends up being spent on officials just to get the money released."
Md Solaiman Parsee Faisal, chief executive officer of Faisal Polymer Industries Ltd, said the existing manual system leaves businesses vulnerable.
"Even when a refund is created, applying for it means officials hold you hostage. They ask for endless documents and delay the process, causing harassment, wasted time and extra costs," he said.
"We have long demanded an online system so that human interaction is minimised and harassment and unofficial costs are reduced."
Experts see trust-building potential
Lutfor Rahman, a former NBR member, said the initiative could help rebuild trust between taxpayers and the revenue authority if implemented properly.
"In countries with compliant tax systems, refunds are automatically deposited into taxpayers' accounts, which encourages people to pay taxes," he told TBS. "In Bangladesh, the absence of such a system is one of the reasons many are reluctant to comply."
He said mistrust persists on both sides, with some businesses hesitant to fully disclose information. He stressed that online refunds must be expanded quickly to income tax and customs, adding that mandatory online return submission would be key to success.
Scepticism remains
Despite the optimism, some business leaders remain cautious.
Amir Hossain Nurani, a steel importer and former FBCCI director, said structural issues must still be addressed.
"In my case, the actual value addition is less than 1%, yet I pay 7.5% at the import stage. I have not received any refund so far," he said.
"Unless refund conditions are simplified, an online system alone will not ensure businesses actually receive their money."
Why refunds arise
Snehasish Barua, a chartered accountant and director of SMAC Advisory Services Ltd, explained that refunds are mainly generated when import-stage taxes exceed actual VAT liability.
"For example, if a business's VAT liability is Tk30 but it paid Tk50 as Advance Tax, the excess Tk20 is refundable," he said.
Refunds can also arise when VAT is deducted twice for the same service, or when exporters pay VAT or Advance Tax on imported inputs despite exports being VAT-exempt.
"Although these refunds are legally due, businesses often face delays, bribery, and years of waiting," Barua said, adding that an online system could significantly reduce these problems.
Refunds in 3-10 days
NBR officials said that under the current manual process, VAT refunds can take six months or longer after application. With the fully online system, refunds could be processed within three to 10 working days, subject to compliance.
A VAT commissioner in Dhaka said taxpayers must submit returns online to qualify for e-refunds. Currently, about 60% of VAT returns are filed online.
Under the new system, supporting documents can be uploaded digitally with the return. The division office will verify the application against 24 checkpoints before forwarding it to the commissioner for approval. Once approved, the refund will be transferred directly to the taxpayer's bank account.
"There will be no need for taxpayers or their representatives to visit the VAT office," the official said, adding that physical visits may still be required if documents are missing or queries arise.
