FBR corrects tax circular, brings section 111 cases under mandatory CRM system

The Federal Board of Revenue (FBR) has issued a corrigendum to its recently issued Income Tax Circular, making it mandatory for tax

ISLAMABAD: The Federal Board of Revenue (FBR) has issued a corrigendum to its recently issued Income Tax Circular, making it mandatory for tax authorities to process proceedings under Section 111 of the Income Tax Ordinance, 2001 through the Compliance Risk Management (CRM) System.

The amendment has been made effective from September 1, 2026, and requires Inland Revenue officers to ensure that cases falling under the specified provisions are first selected and assigned through the CRM system before any proceedings are initiated or amended.

The corrigendum, dated September 1, 2026, bearing reference C.No.1(560)SA-M(IR-Ops)/2026-27/5655-R, was issued by the Inland Revenue Operations Wing in continuation of Circular No. 01 of 2026-27, which had been issued on August 31, 2026.

Under the corrigendum, the FBR has superseded paragraph 2 of the earlier circular. The most significant change is the replacement of Section 121 with Section 111 in the list of provisions covered by the mandatory CRM requirement.

The amended paragraph states that, with effect from September 1, 2026, no new amendment of assessment proceedings, including proceedings under Sections 111, 122, 122A and 177 of the Income Tax Ordinance, 2001, can be initiated or amended by an Inland Revenue officer unless the relevant case has first been selected and assigned through the Compliance Risk Management System.

The original circular issued on August 31 had referred to Section 121 instead of Section 111. The FBR has now formally corrected the provision through the one-page corrigendum.

The tax authority has also issued a strong warning to officers against initiating proceedings outside the prescribed mechanism.

According to the corrigendum, any proceedings initiated in violation of the circular would be considered unauthorized and could be declared void ab initio by the competent authority.

The warning effectively restricts officers from independently selecting cases for amendments where the matter falls within the provisions covered by the CRM system.

Section 111 of the Income Tax Ordinance deals with unexplained income and assets and is among the important provisions used by the tax department when making additions to taxpayers’ assessments.

By bringing Section 111 within the CRM framework, the FBR has further expanded the scope of its system-based approach to tax enforcement. The move is aimed at ensuring that cases are selected through an established risk-based mechanism rather than through individual or discretionary selection by field officers.

The CRM system is intended to promote greater transparency, consistency and data-driven decision-making in tax audits, assessments and related conditions

The FBR clarified that all other contents of the original circular will remain unchanged.

The corrigendum was issued with the approval of the competent authority and has been circulated to the Chief Commissioners of Large Taxpayer Units (LTUs), Regional Tax Offices (RTOs), Medium Taxpayer Offices (MTOs) and Corporate Tax Offices (CTOs) across the country.

The latest clarification is expected to guide field formations in implementing the revised assessment procedure and ensure that proceedings covered by the circular are initiated only after proper selection and assignment through the CRM system.