IRD issues 99.98% of VAT refunds within average of 29 days: Treasury

Saturday, 12 September 2026 00:17 - - {{hitsCtrl.values.hits}}

IRD issues over Rs. 82 b in VAT refunds under new risk-based system
99.98% of low- and medium-risk claims settled, averaging 29 days
High-risk claims lag behind, with only half issued within 45 days
Finance Ministry cites late paperwork from taxpayers as key holdup

The Inland Revenue Department (IRD) has refunded a total of approximately Rs. 82.4 billion in Value Added Tax (VAT) claims under its new Risk-Based Refund System, introduced after the abolition of the Simplified Value Added Tax (SVAT) scheme from 1 October 2025, the Ministry of Finance, Planning and Economic Development said in a statement issued recently.

The figure covers claims filed between October 2025 and April 2026 and processed as at 15 July 2026, split across two categories: Rs. 22.15 billion paid out to low- and medium-risk taxpayers, and Rs. 60.3 billion to high-risk taxpayers.

Under the new system, taxpayers who exported less than 50% of their total supplies in the preceding calendar year, suppliers to Specific/Special enterprises and Strategic Development Projects, and enterprises approved under Section 22(7) of the VAT Act, among other categories, are eligible for VAT refunds. Refunds must legally be issued within 45 days of a correct VAT return being filed by the due date. Low- and medium-risk claims are processed without additional checks, while high-risk claims undergo verification before payment.

Performance has differed sharply between the two groups. Among low- and medium-risk taxpayers, the IRD has issued 99.98% of the Rs. 22.15 billion claimed, at an average turnaround of 29 days, with monthly on-time issuance (within 45 days) climbing from 87% in October 2025 to 99% by April 2026.

Among high-risk taxpayers, the IRD has issued 97% of the Rs. 61.9 billion claimed, but only about half of that amount, Rs. 45.98 billion, or 74.3% of value issued, was paid within the required 45-day window. Monthly on-time issuance in this category fell from over 90% between October 2025 and January 2026 to just 48% by April 2026.

The Ministry attributed the slower pace among high-risk taxpayers to delays in submitting required information and supporting documents, as well as errors, data mismatches and incomplete information in some VAT returns that require further clarification before refunds can be processed.

Overall, of 3,432 VAT refund claims processed within 45 days across both categories, the IRD paid out Rs. 78.83 billion.

The Ministry said the new system had shown strong progress within its first seven months, and that faster submission of documentation by taxpayers, fewer errors in VAT returns, and stronger electronic verification processes are expected to further improve refund turnaround times, while continuing to safeguard Government revenue.