The Federal Board of Revenue (FBR) has issued draft rules to streamline the process of online audit (e-audit) proceedings, enabling taxpayers to attend hearings virtually without the need to visit tax offices.
The FBR aims to modernize tax administration through digital solutions, reducing procedural inefficiencies and ensuring a more transparent audit process.
The FBR has released SRO 636(I)/2021, amending the Income Tax Rules, 2002. To refine the proposed rules, the FBR has invited feedback from stakeholders, requesting comments within 15 days of the notification’s issuance. These new regulations seek to enhance efficiency in tax audits while maintaining strict compliance with tax laws.
According to the new framework, the FBR has introduced Rule 231FA, which outlines the procedural guidelines for e-audit. This initiative aligns with the government’s broader objective of digitizing tax processes to facilitate taxpayers and improve revenue collection mechanisms. The FBR’s rules define key roles within the e-audit system, including the responsibilities of the Audit Officer, Adjudication Officer, and the Automated Case Selection System.
Under the revised rules, once a case is selected for e-audit, the Automated Case Selection System will assign it to an Inland Revenue officer through IRIS, the FBR’s web-based platform. The assigned officer will issue an electronic notice detailing the reasons for the audit and instruct the taxpayer to submit relevant financial records and documentation via digital means. Taxpayers will no longer be required to appear in person, as all proceedings will be conducted online through video links or designated Tax Facilitation Centers.
The FBR has emphasized that these rules are designed to ensure fairness and transparency. If no discrepancies are found in a taxpayer’s records, the audit will be closed without further action. However, if inconsistencies arise, the Audit Officer will prepare a report and forward it through the Automated Case Selection System for further assessment. The Adjudication Officer will then issue a tax assessment order, including penalties and surcharges where applicable, in accordance with the Income Tax Ordinance, 2001.
The FBR’s adoption of e-audit rules signifies a significant step towards modernizing Pakistan’s tax system. By leveraging technology, the FBR aims to enhance efficiency, curb tax evasion, and provide greater convenience to taxpayers. These rules reflect the FBR’s commitment to fostering a fair and digitized tax environment, reinforcing compliance while minimizing administrative burdens on businesses and individuals.