FBR introduces rules for electronic scrutiny of taxpayers

Dawn reported that the Federal Board of Revenue has started using artificial intelligence to review individual tax returns through an automated system. The system is designed to spot factual and legal errors as well as mismatches before any legal or penal step is taken. The draft amendments, which add rule 38-B to the Income Tax Rules 2002, are open to stakeholder feedback before they are finalised.

Under the proposal, the system would compare figures declared in returns with other data held by the tax authorities and flag possible discrepancies. Taxpayers would receive online advice or advance notice through the IRIS portal, giving them a chance to correct errors before enforcement begins. Detection alone would not trigger enforcement action, according to the report.

Each notice would give at least seven days to respond, and a reminder with another seven-day period would follow if no reply arrives. An Inland Revenue officer would then assess the response, or the lack of one, under the Income Tax Ordinance before deciding on any action. The arrangement adds an automated layer after return processing while keeping the officer in charge of whether a discrepancy warrants action.