The Federal Board of Revenue (FBR), through S.R.O. 2098(I)/2026, has introduced Rule 38B in the Income Tax Rules, 2002, establishing a procedure for electronic scrutiny of income tax returns. The mechanism provides for automated scrutiny through a Computerized Risk Management (CRM) system, including analysis and cross-matching of information available with the tax authorities. The reported framework covers return processed under Section 120(2A) of the Income Tax Ordinance, 2001, with particular reference to Tax Year 2026.
Where the automated system identifies factual mistakes, legal errors or discrepancies, taxpayers may receive an online advisory or advance intimation through IRIS. The rules prescribe a minimum response period of seven days to provide clarification, rectify errors or take corrective action. Where no response is received, a reminder providing at least seven additional days must be issued. The relevant Inland Revenue officer will subsequently examine the response and determine whether further action is required under the applicable law.
The introduction of automated scrutiny represents an important shift towards data-driven tax administration. Taxpayers should ensure consistency between their income tax returns, withholding tax information, financial records and other information available to FBR. Although an automated discrepancy does not itself establish a tax default, failure to provide a satisfactory explanation may result in further proceedings. Timely monitoring of IRIS communications and maintaining proper supporting documentation will therefore become increasingly important.