FBR warns taxpayers: Traditional practices, informal shortcuts no longer effective

KARACHI: Rashid Mahmood Langrial, Chairman of the Federal Board of Revenue (FBR), has said that Pakistan’s tax system has been fundamentally transformed over the past two years through artificial intelligence (AI) and digital reforms, warning taxpayers that traditional practices and informal shortcuts are no longer effective.

Addressing at a dinner hosted by the Businessman Panel Progressive (BMPP), Chairman FBR urged businesses community and individual taxpayers to hold detailed consultations with their tax consultants before filing their income tax returns as tax consultants play a vital role in helping clients understand complex tax laws and legally minimise their tax liabilities within the framework of the law.

On the occasion, Saquib Fayyaz Magoon Senior Vice President FPCCI and Chairman BMPP, Khurram Ijaz General Secretary BMPP, Asif Sakhi Vice President FPCCI, Shabbir Mansha Member Supreme Council BMPP, Sham Lal Chairman Pakistan Ginners Association, Khushnood Afta Sheikh and others were also present.

Chairman FBR said that in the past, some taxpayers relied on the assumption that underreporting income or making inaccurate declarations carried a low risk of detection because the FBR lacked the manpower and technological capacity to scrutinise every return.

“However, that assumption is no longer valid as the FBR now has the capability to automatically review every tax return using advanced digital tools,” he informed.

He said that the integration of third-party data has sharply reduced the scope for inaccurate declarations, while use of AI and reforms in the tax system has not only improved administrative processes, the induction of private-sector professionals has significantly strengthened the tax authority’s monitoring capabilities.

Langrial said the transition towards a faceless tax administration has diminished the influence of personal contacts and recommendations that were previously perceived to affect tax matters.

He advised the business community to seek only lawful and technically sound guidance from their tax consultants, cautioning against relying on outdated practices or advice that falls outside the legal framework. “If taxpayers continue to follow old methods during the current filing season, they may face significant and costly financial consequences,” Chairman FBR warned.

Reaffirming the FBR’s commitment to a transparent and technology-driven tax system, he said that the ongoing digital reforms are aimed at strengthening revenue collection and improving the country’s economic stability.

He urged taxpayers to complete their tax affairs transparently and file their returns well before the prescribed deadlines.

Tax consultants and businesses in the past often assumed that the FBR’s limited technological capability and manpower meant there was little chance of being caught for underreporting income or understating tax liabilities. However, with the introduction of AI and the implementation of a faceless tax administration, the system has changed fundamentally, he mentioned.

Chairman FBR said that documenting the economy requires businesses to purchase goods and services only from registered companies and individuals and this would improve transparency in the tax system and help broaden the country’s tax base. He informed that various proposals are under consideration to resolve the issues of tax refund delay aimed to strengthen businesses’ cash flows.

On the occasion, Saquib Fayyaz Magoon said that most of the issues raised by trade bodies have received a positive response and several matters were resolved during the meeting with chairman FBR held on Tuesday in Karachi.

Delays in refunds were a major issued and the chairman has already directed the FBR officials to improve the refund mechanism. He urged the tax authority to introduce a faster refund mechanism for the exporters, arguing that it creates shortage of cash flow and delays force small exporters to absorb refund amounts into their costs, making them less competitive in international markets.

Copyright Business Recorder, 2026