The National Board of Revenue (NBR) has issued directives to field-level tax commissioners to streamline the disposal of tax audit cases and address procedural challenges.

According to the instructions, before transferring tax cases selected for audit to a new jurisdiction, all activities that have already exceeded the time limit under Section 182 of the Income Tax Act, 2023, must be completed in the current jurisdiction.

For cases transferred to a new jurisdiction, any remaining tasks that are not yet time-barred under the Income Tax Act, 2023, may be completed under the new jurisdiction's authority.

In September last year, the NBR directed tax officials to halt the fresh selection of tax returns for audit, citing flaws in the existing system that subjected taxpayers to undue harassment. The current audit guidelines grant tax officials significant discretionary power, which many taxpayers have criticized as unfair.

Won't hesitate to take decisions that can benefit nation: NBR chief

In a formal directive, the NBR instructed all field-level tax offices not to initiate new audits until further notice. However, tax returns already selected for audit would proceed as per normal procedures.

Meanwhile, the NBR has embarked on a plan to digitize its tax audit selection process, replacing the traditional manual system to minimize human intervention and restore taxpayer confidence. This move follows persistent complaints from taxpayers alleging harassment under the existing manual selection process.

NBR Chairman Md Abdur Rahman Khan recently stated that the revenue authority has started work on automating audit selections to make the process more transparent and objective.

“Our goal is to eliminate ambiguity by fully automating the audit selection process, ensuring it is free from human intervention,” the NBR chief said.

NBR reduces VAT on biscuits by half

As part of this transition, the NBR has temporarily suspended the selection of new tax files for audit.