Companies must submit financial statements in machine-readable formats from tax year 2026 or risk invalid tax returns
ISLAMABAD: The federal government has introduced a major compliance requirement for companies through the Finance Act, 2026 by making it mandatory to file financial statements in electronically readable formats with income tax returns from the 2026 tax year.
The amendment to Section 114(2A) of the Income Tax Ordinance, 2001 requires companies to submit financial statements in structured digital formats when filing their income tax returns through the Federal Board of Revenue’s (FBR) IRIS portal.
Failure to comply with the new requirement may result in the tax return being treated as invalid.
Mandatory electronic filing
The Finance Act substitutes sub-section (2A) of Section 114, reaffirming that income tax returns must be filed electronically through the IRIS system in the manner prescribed by the FBR.
The law also authorises the FBR to issue rules through notifications in the official Gazette regarding electronic filing procedures, including verification processes, digital signatures and other requirements relating to the submission of returns, statements and supporting documents.
New requirement for companies
A significant change introduced through the Finance Act is that companies filing returns for tax year 2026 and onwards must submit their accompanying financial statements only in electronically readable file formats.
This marks a shift away from conventional document-based submissions and aims to facilitate automated processing and analysis of financial information by the FBR.
What is an electronically readable format?
The Finance Act defines an electronically readable format as any digital format in which data is structured so that it can be automatically read, extracted, validated and processed by computer systems without human intervention.
Examples of acceptable formats include:
• CSV
• XLSX (Microsoft Excel)
• XML
• XBRL
• JSON
• Other structured or semi-structured digital formats
The legislation specifically excludes formats designed primarily for human reading, including:
• PDF files
• Scanned documents
• Images
• Photographs
Objective of the amendment
The new requirement forms part of the government’s broader digital transformation agenda aimed at modernising Pakistan’s tax administration.
By requiring machine-readable financial statements, the FBR will be able to automate data validation, improve risk profiling, strengthen audit selection and enhance the accuracy and efficiency of tax administration.
The measure is also expected to reduce manual processing, minimise reporting errors and support greater transparency in corporate tax compliance.
The amendment takes effect from tax year 2026, making it compulsory for all companies to ensure that their financial statements are filed in the prescribed electronic formats when submitting income tax returns through the IRIS system.
