SRO 1827(I)/2026 revises Rule 231C of the Income Tax Rules, 2002, setting nominee requirements, committee remuneration and refund conditions for tax disputes.
ISLAMABAD: The Federal Board of Revenue (FBR) has notified revised rules for alternative dispute resolution (ADR) in tax cases, introducing requirements for taxpayer nominees, remuneration for committee members and refunds where a dispute resolution committee is dissolved.
Through SRO 1827(I)/2026, the FBR amended Rule 231C of the Income Tax Rules, 2002, under sub-section (20) of Section 134A, read with sub-section (1) of Section 237 of the Income Tax Ordinance, 2001.
The revised rule applies to all disputes brought or referred for resolution under Section 134A of the Income Tax Ordinance, 2001.
FBR specifies application requirements
Under the revised Rule 231C, an aggrieved person seeking alternative dispute resolution must submit a written application to the FBR in the prescribed format set out in Part I of the Schedule to the rule.
In addition to the documents required under Section 134A(2), the applicant must nominate a person in accordance with Section 134A(3)(c).
The application must include the nominee’s Computerised National Identity Card (CNIC) copy, telephone number, permanent address and email address. The applicant must also provide an undertaking required under the proviso to Section 134A(3)(c).
Furthermore, the taxpayer’s nominee must provide the names of three retired judges in accordance with Section 134A(3)(a).
The revised provisions establish documentation requirements for taxpayers seeking resolution of their disputes through the ADR mechanism.
FBR fixes remuneration for ADR committee
The FBR has prescribed a one-time lump-sum remuneration structure for chairpersons and members of committees constituted under Section 134A(3), with payments linked to the amount of disputed tax liability.
Where the disputed tax liability is up to Rs50 million, the chairperson will receive Rs300,000, while each other eligible committee member will receive Rs150,000.
For disputes involving tax liabilities exceeding Rs50 million, the chairperson will receive Rs500,000 and each other eligible member will receive Rs250,000.
The remuneration provisions exclude an Inland Revenue officer not below BS-21 from the specified payments.
The rules also allow the chairperson and committee members to receive travelling and daily allowances (TA/DA) equivalent to the entitlements admissible to BPS-22 and BPS-21 officers of the federal government, respectively.
Refunds required if committee is dissolved
The revised rules also address situations in which an ADR committee becomes defunct or is dissolved because of administrative, legal or procedural issues.
Where the dissolution is not attributable to any act, omission, fault or delay on the part of either the FBR or the taxpayer, no remuneration or fee will be payable to the chairperson or any committee member under the prescribed remuneration provisions.
Any amount already advanced or deposited must be refunded to the respective parties within 15 days of the committee’s dissolution.
This provision establishes a refund mechanism for cases in which the committee cannot proceed for reasons not attributable to either party.
Seven-day deadline for unavailable committee members
Under the amended rule, a chairperson or member appointed under Section 134A(3) who becomes unavailable or unable to perform their functions because of a conflict of interest or any other reason must formally notify the FBR in writing within seven days of the notification constituting the committee.
The individual must also reimburse the respective party for any advance remuneration or fee already received.
The revised provisions are intended to establish clearer procedural requirements for alternative dispute resolution, including the appointment of nominees, committee remuneration and the handling of cases in which committee members cannot serve.
The changes amend Rule 231C of the Income Tax Rules, 2002, governing the resolution of tax disputes under the Income Tax Ordinance, 2001.