Key Takeaways
- The Federal Board of Revenue (FBR) has implemented a faceless system for tax audits and assessments.
- The system will come into effect on October 15, 2026, for designated tax cases.
- It includes electronic handling of proceedings and quality-control reviews.
The Federal Board of Revenue (FBR) has introduced a comprehensive framework for conducting tax audits and assessments through the National Faceless Centre (NFC) with the aid of artificial intelligence. This system will be operational from October 15, 2026, and will apply to designated tax cases under Section 122E of the Income Tax Ordinance, 2001.
According to the FBR, the new framework aims to strengthen transparency and procedural oversight by electronically handling proceedings, segregating official functions, and requiring quality-control reviews. The system will ensure that different stages of proceedings are handled independently within the prescribed administrative framework.
Under the framework, audit, assessment, and quality-control functions will be assigned to separate officers or units for the same case and tax year. This functional separation is intended to ensure that each stage of the proceedings is handled independently and transparently.
Notices, orders, and other communications will be generated through the FBR’s computerised system and will carry a Digital Identification Number (DIN). This requirement establishes an electronic channel for official communications and documentation in cases processed through the faceless mechanism.
Taxpayers and their authorised representatives will be required to submit replies, documents, and evidence electronically through their designated IRIS accounts. The system makes electronic submission a central component of compliance with the prescribed procedures.
The framework also provides for physical verification where necessary. Such verification may be carried out through the Field Operations Wing, subject to due authorisation. This ensures that the system can adapt to situations that require on-site inspection.
Quality-control arrangements have been incorporated into the framework. Audit reports, adjudication notices, and assessment orders will be subject to quality-control review under the prescribed procedures. This ensures that all decisions are made with the highest level of scrutiny.
The FBR has also included provisions for the transfer of cases to another tax authority in specified circumstances, including situations involving physical records, repeated verification, or other requirements necessitating special handling. This flexibility ensures that the system can adapt to various scenarios.
