Section 175B of the Income Tax Ordinance 2001 allows NADRA to identify potentially under-reported income, assets and transactions, while using artificial intelligence to estimate indicative tax liabilities.

ISLAMABAD: The National Database and Registration Authority (NADRA) will share citizens’ records and other available information with the Federal Board of Revenue (FBR) to broaden Pakistan’s tax base under Section 175B of the Income Tax Ordinance 2001.

The FBR’s updated Income Tax Ordinance, 2001, applicable to Tax Year 2027 (July 1, 2026, to June 30, 2027), outlines NADRA’s role in identifying potential tax discrepancies and supporting tax administration.

READ MORE: FBR defines representative for taxpayers in Tax Year 2027

Under Section 175B, NADRA may share its records with the FBR on its own initiative or upon the Board’s request. It can also submit proposals to expand the tax base and identify individuals, whether registered taxpayers or otherwise, whose income, receipts, assets, properties, liabilities, expenditure or transactions may have escaped assessment, been under-assessed or been misclassified.

The authority may also flag discrepancies between declared values and those notified by the FBR or district authorities, or the actual market value where no official valuation is available.

The law further permits NADRA to use artificial intelligence, mathematical or statistical modelling and other modern computational methods to calculate indicative income and tax liabilities.

The FBR will notify the relevant individual of the estimated liability. The person may then pay the determined amount under terms and conditions prescribed by the Board, potentially including instalments, relief from penalties and default surcharge, discounts and specified payment deadlines.

If the individual fails to pay within the prescribed period, the FBR may initiate action under the Income Tax Ordinance on the basis of the computed liability.

Payments made under the prescribed arrangement will be treated as amended assessments under the relevant provisions of Sections 120 and 122.

Section 175B also allows the FBR and NADRA to establish a memorandum of understanding for the secure exchange and use of personal information. The Board may prescribe the applicable instalment arrangements, concessions and time limits.

READ MORE: FBR requires taxpayers to keep records for six years in Tax Year 2027