FBR proposes new procedures for ADR applications, committee remuneration, multiple cases and withdrawal of pending tax appeals
ISLAMABAD: The Federal Board of Revenue (FBR) has proposed amendments to Rule 231C of the Income Tax Rules, 2002, seeking to revise procedures for the alternative dispute resolution (ADR) of tax disputes.
The FBR issued SRO 1496(I)/2026 dated September 2, 2026, proposing amendments to Rule 231C, which governs disputes referred for resolution under Section 134A of the Income Tax Ordinance, 2001.
Under the proposed amendments, an aggrieved person seeking ADR would be required to submit a written application to the FBR in the prescribed form, along with the required supporting documents.
The applicant would have to nominate a person to serve on the ADR Committee and provide the nominee’s CNIC, phone number, permanent address and email address, along with the undertaking required under the Income Tax Ordinance.
The proposed rules would further require the taxpayer’s nominee to submit three names of retired judges for consideration as Chairperson of the ADR Committee. The applicant would also have to provide details including their phone numbers, bank account information, permanent addresses and email addresses.
Proposed remuneration for ADR committees
The FBR has proposed a revised lump-sum, one-time remuneration structure for members of ADR committees based on the disputed tax liability.
For disputed tax liability of up to Rs50 million, the proposed remuneration would be:
• Rs300,000 for the Chairperson.
• Rs150,000 for each other committee member, excluding the Chief Commissioner Inland Revenue.
For disputed tax liability exceeding Rs50 million, the proposed remuneration would be:
• Rs500,000 for the Chairperson.
• Rs250,000 for each other committee member, excluding the Chief Commissioner Inland Revenue.
The Chairperson and committee members may also be entitled to TA/DA equivalent to the allowances admissible to BPS-22 and BPS-21 federal government officers, respectively.
Rules proposed for multiple ADR applications
The draft amendments also provide for the clubbing of multiple applications submitted by the same taxpayer during the same financial year where they involve identical issues.
Where the same Chairperson has been appointed and the committees are constituted within 90 days, the applications may be clubbed and processed together.
In such circumstances, the members would be considered to constitute a single committee for all purposes, including determination of remuneration, irrespective of whether separate orders for constituting the committees had been issued.
The proposed amendments also state that where an ADR Committee becomes defunct or is dissolved because of an administrative, legal or procedural issue that is not attributable to the FBR or taxpayer, no remuneration would be payable.
Any amount already advanced or deposited would have to be refunded to the respective parties within 15 days of the committee’s dissolution.
Conditions for ADR committee members
The draft rules prescribe conditions for Chairpersons and members who become unavailable or are unable to perform their functions because of a conflict of interest or any other reason.
Such members would be required to notify the FBR in writing within seven days of notification of the committee’s constitution.
However, once the prescribed remuneration has been released or paid, the member or Chairperson would not be entitled to recuse themselves or withdraw from the proceedings until a final decision has been reached or the committee has been dissolved.
Withdrawal of pending appeals
The proposed amendments also introduce a prescribed application for withdrawal of an appeal under Section 134A(9) of the Income Tax Ordinance, 2001.
Under the proposed procedure, a taxpayer who has applied for the constitution of an ADR Committee and whose committee has subsequently been constituted would be required to withdraw the relevant pending appeal, reference application or civil appeal.
The prescribed application would seek disposal of the appeal as withdrawn while retaining the taxpayer’s right to seek reinstatement if the ADR Committee fails to decide the dispute within the stipulated period.
The proposed amendments are aimed at establishing a more structured framework for processing ADR applications, constituting committees, determining remuneration and managing appeals linked to tax disputes.