Published: 6 October 2026 | By Umair A R Mughal
Until now, an Inland Revenue Commissioner could pick a taxpayer for audit and issue a demand largely on their own judgment. The Federal Board of Revenue (FBR) has now taken that power away. Through S.R.O. 1665(I)/2026, audit and assessment work that used to sit with local Commissioners has been moved to the National Faceless Center (NFC).
Here is what changed, what did not, and what taxpayers should do before the extended 15 October 2026 return deadline.
What S.R.O. 1665(I)/2026 Does
| Item | Detail |
|---|---|
| Legal instrument | S.R.O. 1665(I)/2026, amending the Income Tax Rules, 2002 |
| Powers withdrawn | Commissioners’ discretionary power to conduct audit and assessment through direct interaction with taxpayers |
| Provisions covered | Section 177 (audit), Section 214C (selection for audit) and proceedings under Section 111 (unexplained income or assets) of the Income Tax Ordinance, 2001 |
| Who handles these cases now | The National Faceless Center in Islamabad |
| Structure | Four wings: Audit, Assessment, Quality Control and Field Operations |
In plain terms, a local Commissioner or field officer can no longer open an audit or a Section 111 case on their own and deal with the taxpayer face to face. Those cases now go through the NFC, where they are selected by the system and handled online through IRIS.
Why the FBR Made This Change
For years, trade bodies and tax consultants have complained that wide discretionary powers at field level led to selective audits, pressure and harassment. The FBR says the aim now is the same rules for every taxpayer and decisions based on data instead of personal judgment. This follows the NFC’s launch on 1 October and the New Tax Operating Model. See our earlier coverage of the National Faceless Center and the FBR\u2019s AI-based audit system.
What Changes for Taxpayers
- No more summons to the local tax office. Notices, queries and replies move to IRIS.
- Cases are selected by risk, not by officer choice. The system flags mismatches between your return and third-party data such as banking, travel, vehicle and property records.
- Several officers handle each case. Audit, assessment and quality control are separated, so no single officer controls the outcome.
- A written record. Every notice and reply sits in IRIS, which helps if you later appeal.
What Has Not Changed
This is a relief from arbitrary selection, not from audit. The same sections (177, 214C and 111) still apply. They are now used by the NFC instead of the local Commissioner, and the Field Operations Wing still exists for verification or recovery where the law requires it. If your return does not match the data the FBR holds, you can still be selected, and an unexplained gap between your spending and declared income can still lead to a Section 111 case.
The change also applies to income tax. Sales tax matters follow their own process, including the e-scrutiny of sales tax returns.
Why Data Accuracy Matters More Now
With a computer doing the selecting, you cannot rely on explaining a gap in person. Your return, wealth statement and the third-party data the FBR holds should tell the same story. Before you file:
- Reconcile your wealth statement with your income, assets and major expenses. See documents required for an income tax return.
- Declare vehicles, property and large purchases, and keep proof of the source of funds: bank statements, gift deeds, loan agreements and sale deeds.
- Update your email and mobile number in IRIS so you do not miss a notice.
- Check that you are on the list. See ATL status check.
The 15 October Deadline
The FBR extended the Tax Year 2026 return deadline to 15 October 2026 under Circular No. 03. See our explainer. Anyone who files after that date is treated as a non-filer, since the late filer category has ended. Reinstating your name on the ATL carries a surcharge of Rs 25,000 for individuals, Rs 50,000 for AOPs and Rs 100,000 for companies, as reported at the time of the announcement. Details are in our post on the end of the late filer category and our guide to late filing penalties. Late filing also attracts a penalty under Section 182.
Do not wait for the last day, when IRIS is under heavy load. File early and keep proof of submission.
Frequently Asked Questions
What is S.R.O. 1665(I)/2026?
An FBR notification amending the Income Tax Rules, 2002. It withdraws the discretionary power of Commissioners Inland Revenue to conduct audits and assessments through direct interaction under Sections 177, 214C and 111, and gives that work to the National Faceless Center.
Can my local Commissioner still audit me?
Not on their own discretion for these sections. Audit and assessment proceedings are now conducted by the National Faceless Center.
Does this mean I cannot be audited?
No. You can still be selected if your return does not match the data the FBR holds. The difference is that selection is by the system and the process runs online.
Does this apply to sales tax?
The S.R.O. amends the Income Tax Rules. Sales tax returns are reviewed through a separate e-scrutiny process.
What is the current return deadline?
15 October 2026 for Tax Year 2026, as extended by the FBR.
Need Help Before the Deadline? We Can Help
TaxAccountant.pk helps with wealth statement reconciliation, return filing, ATL restoration and responses to FBR notices. See our income tax return filing services.
- WhatsApp / call: +92 339 505 0983
- Email: info@taxaccountant.pk
- Address: Office 1, First Floor, United Plaza, Main Service Road, Khanna Pull, Rawalpindi
Based on public reports of S.R.O. 1665(I)/2026. We will update this post if the FBR issues further clarification. Check fbr.gov.pk for the official text.
