Islamabad, January 22, 2026 – The National Assembly on Thursday approved the Income Tax Ordinance (Third Amendment) Bill, 2025, a key piece of legislation aimed at improving the Alternative Dispute Resolution (ADR) system for resolving income tax disputes in Pakistan.
The bill was presented by Minister of State for Finance, Revenue and Railways Bilal Azhar Kayani, who said the amendments were designed to address weaknesses in the existing legal framework, particularly regarding the appointment of the ADR Committee Chairperson. The revised law seeks to promote transparency, impartiality, and efficiency in tax dispute resolution while easing the workload of courts and tax tribunals.
Under the amended ordinance, both the taxpayer and the Federal Board of Revenue (FBR) will nominate three candidates each for the position of ADR Committee Chairperson. In cases where mutual agreement cannot be reached, one nominee from each side will be sent to the Law Minister, who will make the final selection. The Chairperson must be a retired judge of the High Court, Federal Constitutional Court, or Supreme Court with relevant experience in tax or commercial matters.
Speaking during the session, Kayani highlighted that under the previous system, the FBR had exclusive authority to appoint the chairperson, which had raised concerns among taxpayers regarding neutrality and fairness. He said the new mechanism strengthens safeguards for taxpayers and reinforces confidence in the ADR process.
Lawmakers noted that the enhanced ADR framework is expected to provide a faster, cost-effective, and credible alternative for resolving income tax disputes, ultimately improving Pakistan’s overall tax administration and business environment.