FBR launches automated scrutiny of income tax returns, with time to respond

The Federal Board of Revenue (FBR) has introduced an automated system to examine income tax returns. Under it, taxpayers will be told about errors and discrepancies found in their returns and allowed to respond before any legal or penal proceedings begin.

The procedure was notified on Wednesday through SRO 2098 of 2026, according to TechJuice. The notification adds Rule 38B to the Income Tax Rules 2002. The rule covers electronic scrutiny and the intimation of issues detected by the automated system.

The system will cross-match the information declared in returns with other data held by the tax authorities. It will flag factual errors, legal mistakes and discrepancies in tax records.

Taxpayers will be informed through an online advisory or an advance intimation sent via IRIS. The Officer of Inland Revenue who has jurisdiction over a taxpayer may also issue the same system-generated intimation.

Each notice must state a response period of at least seven days. In that time the taxpayer may explain the issue, correct the errors or take other remedial steps. If the taxpayer does not respond, the system will send a reminder that allows at least seven more days.

Details of the detected issues, the notices sent and the responses received will be shared with the responsible Officer of Inland Revenue. All notices, responses and actions will be recorded on the system's dashboard so they can be monitored.

The officer will review the taxpayer's response, if there is one, and assess the matter. The officer may then take appropriate action under the Income Tax Ordinance 2001 and the rules made under it.