The Federal Board of Revenue (FBR) has introduced a new automated scrutiny procedure for income tax returns, allowing taxpayers to receive electronic notifications about factual or legal errors and discrepancies before any legal or penal action is initiated. Under the revised mechanism, taxpayers will be informed of issues identified through an automated system and provided an opportunity to explain their position, correct mistakes or take other necessary action within the specified response period. The initiative is intended to strengthen the tax return examination process through digital monitoring and electronic communication while providing taxpayers with an opportunity to address identified issues before the matter proceeds towards further legal action. The new procedure establishes a formal mechanism for communicating discrepancies detected during the examination of income tax returns.
The procedure was introduced through Statutory Regulatory Order (SRO) 2098(I)/2026, dated November 10, 2026, through which the FBR inserted Rule 38B into the Income Tax Rules, 2002, immediately after Rule 38A. The newly introduced provision is titled “Procedure for electronic scrutiny and intimation of issues detected by the automated system” and establishes the framework for automated examination, identification of discrepancies and electronic notification to taxpayers. Under this arrangement, an automated system, including the Customer Relationship Management (CRM) system, will process income tax returns submitted by taxpayers and identify potential factual or legal mistakes requiring clarification or correction.
Once an issue is detected, the system may generate an online advice or advance intimation through the FBR’s IRIS portal, highlighting the relevant errors, inconsistencies or discrepancies in the submitted return. The notification will allow taxpayers to review the identified issues and provide explanations, rectify incorrect information or undertake other corrective measures where necessary. The rule also authorises the Officer of Inland Revenue having jurisdiction over the taxpayer to issue the same type of system-generated advance intimation. This provision establishes electronic communication as an important part of the scrutiny process, enabling taxpayers to receive information about identified concerns through the tax authority’s digital platform rather than waiting for the matter to progress into further proceedings.
The revised rules also establish specific timelines for taxpayer responses. Every electronic intimation must clearly mention the period within which the taxpayer is required to respond, and this timeframe cannot be less than seven days. If the taxpayer does not submit a response within the specified period, the system will issue a reminder, which must also provide a response period of at least seven days. This requirement establishes a minimum response window for taxpayers and provides an additional opportunity to address the issues raised by the automated scrutiny mechanism. The introduction of a reminder process also creates a structured communication procedure before the tax authorities consider further action in cases where taxpayers fail to respond to the initial notification.
Under Rule 38B, records of discrepancies detected by the automated system, electronic intimations issued to taxpayers and responses received will be communicated to the Officer of Inland Revenue responsible for the taxpayer’s jurisdiction. The system will also maintain a dashboard containing details of intimations, taxpayer responses and actions taken during the scrutiny process. This digital recordkeeping mechanism is expected to provide tax officials with access to relevant information when reviewing individual cases and determining whether further examination or intervention is necessary. By maintaining a documented record of communication and corrective actions, the procedure establishes a more organised framework for tracking issues identified through automated tax return processing.
The implementation of automated scrutiny, data analysis and cross-matching of other available information will be carried out through a Change Request Form (CRF). This mechanism will cover the identification of issues by the automated system, the analysis of available data and the electronic communication of discrepancies to taxpayers. Following the notification process, the relevant Officer of Inland Revenue will examine the taxpayer’s response or the absence of a response and determine whether additional action is required under the applicable provisions of income tax law and related rules. The officer will retain responsibility for deciding the appropriate course of action based on the circumstances of each case. Through the introduction of Rule 38B, the FBR has formalised a digital procedure that connects automated tax return scrutiny with taxpayer communication, respons
Follow the PakBanker Whatsapp Channel for updates across Pakistan’s banking ecosystem.