FBR makes CRM selection mandatory for tax cases from Sept 1

ISLAMABAD – The Federal Board of Revenue (FBR) has made case selection through the Compliance Risk Management (CRM) System mandatory for tax assessments ending the practice of direct or discretionary case selection by field officers.

According to Income Tax Circular No. 01 of 2026-27, IR-Operations issued by the FBR on August 31, 2026, no new assessment or amendment proceedings can be initiated from September 1, 2026, unless the case has been selected through the CRM system and assigned to the relevant officer.

Tax cases to be selected through CRM

The circular states that the purpose of the measure is to ensure transparency, uniformity and objectivity in the selection of cases for assessment.

According to the FBR, proceedings under Sections 121, 122, 122A, 122C and 177 of the Income Tax Ordinance, 2001 cannot be initiated or amended unless the relevant case has been selected through the CRM system.

Proceedings without CRM selection to be considered unauthorized

According to the circular, any proceedings initiated without selection through the CRM system will be considered unauthorized and may be declared void ab initio by the competent authority. The FBR has directed all Chief Commissioners Inland Revenue to ensure strict compliance with the circular.

What will happen to pending cases?

Assessment proceedings that were already underway by August 31, 2026 may be completed under the previous procedure. However, for any new show-cause notice, amendment, reassessment or other new proceedings initiated on or after September 1, CRM-based case selection will be mandatory.

Exemption also requires written approval

The FBR has clarified that any request for exemption from CRM selection must be submitted in writing to the Member (IR-Operations) and approval for the exemption must also be obtained in writing. According to the circular, verbal exemptions will not be accepted.

What is CRM?

Compliance Risk Management (CRM) is a computerized system designed to identify potential risks of tax non-compliance among taxpayers.

Under the Finance Act 2026, CRM has been defined in Section 165AB(f) as a computer program that identifies risks related to compliance with tax laws and provides information about such risks.

The system can identify potential risks such as underreported sales, unusually high expenses and undisclosed or underreported income, assets or transactions.

CRM Directorate General Directed to keep system operational 24/7

The FBR has directed the Directorate General of Compliance Risk Management to keep the CRM system operational 24 hours a day and provide technical assistance and training to field formations.

According to the circular, any technical malfunction or interruption in the system must be reported to the Member (IR-Operations) within 24 hours. The circular has been signed by Naila Ashraf Khan, SA to Member (IR-Operations) and states that it will take precedence over any previous conflicting instructions.

What will change for taxpayers?

Under the new system, the FBR is seeking to reduce human discretion in the selection of tax cases. Under the previous procedure, field officers could directly select certain cases for assessment or audit. Under the new system, cases will first be selected through the CRM system and then assigned to the relevant officer for further proceedings.

According to the FBR, the change aims to make tax administration more digital, automated and transparent while prioritizing cases that carry genuine compliance risks.