Written by Hamza Shahnawaz in Taxation Draft rules would allow taxpayers to receive electronic notices identifying factual, legal or other discrepancies before formal action is initiated. The Federal Board of Revenue (FBR) has proposed introducing an automated electronic scrutiny system for income tax returns, allowing taxpayers to address discrepancies identified by the system before any legal or penal action is initiated. The proposal has been issued through SRO 1690(I)/2026, which seeks to amend the Income Tax Rules, 2002 by inserting a new Rule 38B on the electronic scrutiny and intimation of issues detected by an automated system. The draft has been published for public feedback, with objections or suggestions required to be submitted within three days of its publication in the official Gazette. Automated System to Identify Tax Return Issues Under the proposed Rule 38B, an automated system, including CRM, would process income tax returns furnished by taxpayers under Section 120(2A) of the Income Tax Ordinance, 2001. The system may issue an online advice or advance intimation through IRIS, identifying factual or legal mistakes and discrepancies in a taxpayer’s return. The proposed mechanism is intended to give taxpayers an opportunity to clarify an issue, correct errors or take other corrective action before formal legal or penal proceedings are considered. The same system-generated advance intimation could also be issued by the Inland Revenue officer having jurisdiction over the taxpayer. Taxpayers to Get at Least Seven Days The proposed rules would require the electronic intimation to specify a response period of at least seven days.…