New system will electronically identify discrepancies, notify taxpayers through IRIS and provide at least seven days to respond before further action.
ISLAMABAD: The Federal Board of Revenue (FBR) has introduced an electronic scrutiny mechanism for sales tax returns, allowing the automated detection and communication of discrepancies to registered taxpayers before formal legal or penal proceedings are initiated.
The FBR has issued SRO 1655(I)/2026, amending the Sales Tax Rules, 2006 through the insertion of a new Chapter XII-A, titled “Procedure for Electronic Scrutiny and Intimation of Issues Detected by the Computerized System”, after Rule 150H.
Automated scrutiny of sales tax returns
Under the newly inserted Rule 150HA, the chapter will apply to the automated scrutiny, analysis and cross-matching of sales tax returns and other available data relating to registered persons.
The process will be conducted through the computerised system implemented by the FBR under Section 50B of the Sales Tax Act.
The electronic mechanism is designed to identify factual or legal errors, discrepancies and other potential issues by analysing taxpayers’ sales tax information.
FBR to notify taxpayers electronically
Under Rule 150HB, the computerised system may issue an online advice or advance intimation through IRIS, identifying factual or legal mistakes and discrepancies detected during automated scrutiny.
The advance intimation is intended to give registered persons an opportunity to explain the issue, rectify errors or take other corrective measures before any legal or penal proceedings are initiated.
The same system-generated advance intimation may also be issued by the Officer of Inland Revenue having jurisdiction over the registered person.
The electronic notice must specify a response period of at least seven days, during which the taxpayer may explain the discrepancy, correct the error or take another appropriate corrective measure.
Reminder to taxpayers who fail to respond
If a registered person does not respond within the prescribed period, the computerised system will issue a reminder.
The reminder will provide a further period of not less than seven days for the taxpayer to respond to the discrepancies identified during the electronic scrutiny.
The record of discrepancies detected and communicated to the registered person, together with any response received, will then be conveyed to the relevant Officer of Inland Revenue.
Electronic record of scrutiny process
The FBR has also prescribed that all electronic intimations issued to registered persons, responses received and actions taken will be recorded on a dashboard developed under the computerised system.
The automated scrutiny, analysis and cross-matching of sales tax returns and other available information, as well as the identification and electronic communication of discrepancies, will be implemented through a Change Request Form (CRF).
The CRF-based implementation is intended to support the smooth and efficient operation of the electronic scrutiny mechanism.
Inland Revenue officers to review responses
The Officer of Inland Revenue having jurisdiction over the registered person will be responsible for examining the taxpayer’s response to discrepancies identified electronically.
Following the review, the officer may take appropriate action where required under the relevant provisions of the Sales Tax Act and the rules made thereunder.
The new framework establishes a structured electronic process in which the FBR can identify potential errors in sales tax returns, notify taxpayers, allow them time to respond and maintain a record of the subsequent action before further proceedings are considered.