FBR introduces automated scrutiny of income tax returns, gives taxpayers time to correct errors

The Federal Board of Revenue (FBR) has established automated checks for income tax returns, with taxpayers to be notified of possible errors and given a chance to respond before legal or penalty proceedings begin. The framework was introduced through SRO 2098(I)/2026 on November 10, adding Rule 38B to the Income Tax Rules, 2002. It applies to returns covered by Section 120(2A) of the Income Tax Ordinance, 2001, and uses Computerised Risk Management to compare declarations with other available information.

Taxpayers notified through the IRIS platform must receive at least seven days to explain or correct an issue; a reminder must allow at least seven more days if they do not respond. Inland Revenue officers will review the explanations, or the lack of a response, and retain records of scrutiny and follow-up on a dedicated dashboard. The procedure does not remove the FBR’s existing authority to act under tax law, and implementation is to proceed through a Change Request Form. The proposed changes had earlier been published on October 6 through SRO 1690(I)/2026.