What happened
According to Dawn, the Federal Board of Revenue (FBR) has begun expanding its application of artificial intelligence to examine individual tax returns. To support this initiative, amendments have been proposed to the Income Tax Rules 2002 under draft rules titled "38-B Procedure for electronic scrutiny and intimation of issues detected by the automated system." This mechanism introduces an automated verification phase right after tax returns are processed, detecting factual or legal errors before formal action is taken.
Key facts
According to details published by Dawn, the proposed rules introduce the following operational procedures:
- Feedback timeline: The proposed draft rules will be finalized three days after receiving feedback from stakeholders. Additional details on submission channels are not specified in the source; please check the official notice.
- Automated cross-matching: The system automatically evaluates and cross-references figures provided in tax returns against available records stored by tax authorities.
- Digital notification: Taxpayers will be issued advance intimations or online advice flagging identified discrepancies via the IRIS portal, sent by the system or a jurisdictional Inland Revenue officer.
- Response windows: Taxpayers are allowed a minimum of seven days to offer clarifications or correct mistakes. If a taxpayer fails to reply, a reminder grants a second window of at least seven days.
- Officer discretion: Automated detection will not directly spark enforcement actions. A jurisdictional Inland Revenue officer must review the taxpayer's response or lack of response before initiating proceedings under the Income Tax Ordinance and rules.
Why it matters
According to Dawn, this new procedure is designed to give taxpayers an opportunity to resolve mistakes and clarify issues prior to the initiation of legal or penal proceedings. While automated checks provide early detection, human tax officers retain final authority in deciding whether flagged issues warrant legal action under the law.
Source: Dawn - Home · Published October 07, 2026 · Photo by Sunrise King on Unsplash