FBR Introduces Faceless Audit and Assessment System for Taxpayers

ISLAMABAD: The Federal Board of Revenue (FBR) has issued a new notification introducing a faceless system for tax audits and assessments, aiming to make the process more transparent and free from direct human interaction. According to S.R.O. 1665(I)/2026, issued under the Income Tax Ordinance, 2001, a new Chapter XX titled 'Faceless Audit and Assessment' will be added to the Income Tax Rules, 2002. The change comes after a previous notification was published on September 25, 2026, as required by law. Under the new rules, a National Faceless Center will be established, headed by a Director General and supported by various tax authorities and staff. The Center will have four wings: Audit, Assessment, Quality Control, and Field Operations. Each wing will have units managed by designated officers. The faceless system will apply to audits, assessments, amendments, best judgment assessments, provisional assessments, and related proceedings, including penalties and default surcharges. The Board will specify which cases or classes of cases fall under this system. A key feature of the new rules is the use of an allocation algorithm to assign different functions—such as audit, assessment, and quality control—to separate officers or units. No single officer will perform more than one function in the same case for the same tax year. The identity of the officers handling a case will be kept confidential in FBR's electronic system. All notices, orders, and communications from the Center will be generated electronically with a Digital Identification Number and served through the taxpayer's IRIS account. Taxpayers must also submit replies, documents, and evidence through the same digital account. The audit wing will conduct audits, issue notices, gather information, and prepare audit reports. If physical verification is needed, the Chief Commissioner may direct the Field Operations Wing to carry it out. The Quality Control Wing will review audit reports and assessment orders to ensure quality. The new rules also allow for the transfer of a case from the Center to a regular Commissioner if it cannot be effectively handled in a faceless manner, or if it is connected to another proceeding where separate handling could harm revenue or the taxpayer. The Board may also transfer cases on its own. The FBR has been given the power to issue instructions, standard operating procedures, and formats to implement the new system effectively. The provisions will come into force on a date to be specified by the Board through an official notification, with different dates possible for different types of cases.