Sections 214B and 214C empower the FBR to review departmental decisions and select taxpayers for computerised audits, subject to statutory safeguards and time limits.
The Federal Board of Revenue (FBR) has outlined its powers to call for tax records, review departmental decisions and select taxpayers for audit under Pakistan’s income tax laws for Tax Year 2027.
The Income Tax Ordinance, 2001, updated up to June 30, 2026, covers the tax year running from July 1, 2026, to June 30, 2027. Sections 214B and 214C specify the Board’s authority in these matters.
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FBR can review departmental decisions
Under Section 214B, the FBR may, on its own initiative, call for and examine records of departmental proceedings conducted under the Income Tax Ordinance or its rules. The purpose is to assess the legality or propriety of decisions and orders issued in such proceedings.
The Board may pass an order it considers appropriate after reviewing the record. However, it cannot impose or increase tax or penalties beyond the original amount without giving the affected person an opportunity to explain their position and be heard.
The law also restricts the exercise of this power. Proceedings cannot be initiated while an appeal is pending, and the Board cannot issue an order under this section after three years from the date of the original decision or order.
FBR can select taxpayers for audit
Section 214C authorises the Board to select individuals or classes of taxpayers for income tax audits through a computerised ballot. The selection may be random or based on parameters determined by the FBR.
The provision requires the Board to keep the selection parameters confidential. Audits of selected taxpayers must follow the procedure prescribed under Section 177 and the applicable provisions of the Income Tax Ordinance.
The law also clarifies that the FBR is deemed to have always possessed the power to select taxpayers for audit under this section.
Commissioner retains independent audit powers
Section 214C further states that the Commissioner’s powers under Section 177 remain independent of the Board’s audit-selection authority.
Accordingly, the Commissioner may separately call for taxpayers’ records and documents, including books of account, and conduct audits under Section 177.
These provisions establish separate mechanisms for reviewing departmental decisions and selecting taxpayers for audit during Tax Year 2027.
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