FBR deploys AI to detect discrepancies in tax returns
ISLAMABAD: The Federal Board of Revenue (FBR) has expanded the use of artificial intelligence to scrutinise individual tax returns, enabling its automated system to detect factual and legal errors and discrepancies before initiating legal or penal action. Under the mechanism, taxpayers will first be informed electronically about discrepancies detected in their income tax returns and allowed to…
Islamabad, November 12th, 2026 - The Federal Board of Revenue (FBR) has implemented artificial intelligence to identify discrepancies in individual tax returns. This automated system can pinpoint factual and legal errors, alerting taxpayers before any legal action is taken. Under the new SRO 2098 of 2026, taxpayers will receive electronic notifications of detected discrepancies, allowing them to clarify or rectify the errors through a specific process.
The new procedures, titled “38B. Procedure for electronic scrutiny and intimation of issues detected by the automated system,” amend the Income Tax Rules 2002.
The FBR's new system analyzes and cross-matches data from different sources, flagging potential discrepancies for taxpayer review. Taxpayers receive online advisories or advance intimation via the IRIS system, detailing the identified issues, which could include factual errors, legal mistakes, or discrepancies in tax records. These notices provide a clear response period of at least seven days, allowing taxpayers to explain, correct, or take remedial action.
If no response is received within the specified period, a reminder is issued, extending the response window by another seven days.
All notifications, taxpayer responses, and actions taken are documented in the system’s dashboard for monitoring and reference. Inland Revenue officers review taxpayer responses, assessing the matters and taking appropriate action under the Income Tax Ordinance 2001 and its rules if necessary.
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