ISLAMABAD: The Federal Board of Revenue (FBR) has widened its use of artificial intelligence to examine individual income tax returns. The aim is to catch factual and legal errors before any legal or penal action is considered.
The procedure was notified on Wednesday through SRO 2098 of 2026, which inserts Rule 38B into the Income Tax Rules 2002. Under it, an automated system will compare the details declared in a return with other data held by the tax authorities and flag any discrepancies it finds.
Taxpayers will be informed electronically, through an online advisory or advance intimation sent via IRIS. The Officer of Inland Revenue with jurisdiction over the taxpayer may also issue the same intimation. A notice may point to factual errors, legal mistakes or mismatches in tax records, giving the taxpayer an opportunity to explain, correct the return or take other remedial steps.
Each notice must state a response period of at least seven days. If the taxpayer does not reply within that time, a reminder will follow, allowing at least a further seven days.
The identified issues, the notices sent and any responses received will be shared with the concerned Inland Revenue officer. All of it will be logged on the system’s dashboard for monitoring. The officer will review the taxpayer’s reply, if one is received, and may then proceed under the Income Tax Ordinance 2001 and the rules made under it.
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