The Federal Board of Revenue (FBR) has introduced an automated system to examine income tax returns and identify potential errors or discrepancies before initiating further legal action.
The new procedure was introduced through SRO 2098(I)/2026, dated November 10, 2026, amending the Income Tax Rules, 2002, through the addition of Rule 38B.
Under the new rules, the FBR will use Computerised Risk Management (CRM) to analyse tax returns covered under Section 120(2A) of the Income Tax Ordinance, 2001. The system will compare declared information with available records to identify factual mistakes, legal inconsistencies and other discrepancies.
Taxpayers to Receive at Least Seven Days to Respond
If the automated system identifies an issue, the taxpayer may receive an electronic notification through the FBR’s IRIS portal, explaining the discrepancy and requesting clarification or correction.
Taxpayers will be given at least seven days to respond, provide an explanation or correct the information. If no response is received, a reminder will be issued, allowing at least another seven days for compliance.
This mechanism is designed to give taxpayers an opportunity to resolve potential errors before further proceedings are considered.
Inland Revenue Officers to Review Cases
The automated system will maintain records of identified discrepancies, notifications and taxpayer responses. These details will be forwarded to the relevant Inland Revenue officer for examination.
The officer will review the taxpayer’s explanation or consider the absence of a response and may initiate further action under the applicable provisions of the Income Tax Ordinance, 2001, where necessary.
The FBR will also maintain a dedicated dashboard to monitor notifications, responses and actions taken by tax officials.
Implementation Through IRIS
The new scrutiny mechanism will be implemented through a Change Request Form (CRF), covering automated analysis, cross-matching of information and electronic communication with taxpayers.
The amendment has been issued under Sections 120(2A) and 237(1) of the Income Tax Ordinance, 2001, following the earlier publication of proposed changes through SRO 1690(I)/2026 on October 6, 2026.
What This Means for Taxpayers
The new rules introduce a more technology-based approach to tax return examination in Pakistan. Taxpayers will have an opportunity to explain or correct identified discrepancies before further legal or penal proceedings are considered.
However, taxpayers should regularly check their IRIS accounts, maintain accurate financial records and respond to electronic notifications within the prescribed deadlines to avoid potential complications.