Lahore 22°C
Algorithmic settlement mechanism
(1) Notwithstanding anything contained in this Ordinance, the Board may establish digitally operated algorithmic settlement mechanism (hereinafter referred to as the mechanism) for settlement of tax proceedings at any stage before any assessment or amendment of assessment order under sections 121, 122 or 122E of this Ordinance through revision of return under subsection (6) of section 114 in certain cases.
(2) In case the mechanism calculates and presents to the taxpayer a settlement offer for voluntary revision of return as per the criteria provided under sub-section (3), the taxpayer may avail the offer as provided in sub-section (4).
(3) The system generated settlement offer shall be calculated on the basis including but not limited to—
(a) the stage of proceedings at which settlement is offered;
(b) the taxpayer‘s compliance history, as maintained in FBR‘s data;
(c) the nature and character of the discrepancy, including whether it involves a valuation or legal interpretation dispute, unexplained income or assets, or concealment; and (d) any other basis the Board may consider relevant to ensure revenue adequacy and equitable treatment of taxpayers.
(4) A taxpayer who opts to avail this mechanism shall, within ten days from the date of settlement offer to—
(a) accept the settlement offer on IRIS;
(b) deposit the settlement offer amount along with revised return; and (c) revise the relevant return of income to incorporate the settled amount.
(5) The issues confronted to the taxpayer through notice of selection of audit, a notice under section 111, an audit report under sub-section (6) of section 177, a notice under sub-section (9) of section 122, as the case may be, shall stand abated, if the taxpayer revises the return by accepting the offer as provided in sub-section (4).
(6) Revision of return consequent upon acceptance of offer under sub-section (4) of this section shall not preclude proceedings in respect of any other issue or discrepancy not covered by the settlement offer, nor shall it affect proceedings for any other tax year.
(2) In case the mechanism calculates and presents to the taxpayer a settlement offer for voluntary revision of return as per the criteria provided under sub-section (3), the taxpayer may avail the offer as provided in sub-section (4).
(3) The system generated settlement offer shall be calculated on the basis including but not limited to—
(a) the stage of proceedings at which settlement is offered;
(b) the taxpayer‘s compliance history, as maintained in FBR‘s data;
(c) the nature and character of the discrepancy, including whether it involves a valuation or legal interpretation dispute, unexplained income or assets, or concealment; and (d) any other basis the Board may consider relevant to ensure revenue adequacy and equitable treatment of taxpayers.
(4) A taxpayer who opts to avail this mechanism shall, within ten days from the date of settlement offer to—
(a) accept the settlement offer on IRIS;
(b) deposit the settlement offer amount along with revised return; and (c) revise the relevant return of income to incorporate the settled amount.
(5) The issues confronted to the taxpayer through notice of selection of audit, a notice under section 111, an audit report under sub-section (6) of section 177, a notice under sub-section (9) of section 122, as the case may be, shall stand abated, if the taxpayer revises the return by accepting the offer as provided in sub-section (4).
(6) Revision of return consequent upon acceptance of offer under sub-section (4) of this section shall not preclude proceedings in respect of any other issue or discrepancy not covered by the settlement offer, nor shall it affect proceedings for any other tax year.
Amendment history (1)
- 1Section 134B inserted by the Finance Act, 2026.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
Source FBR PDF page 286
Unofficial reference, compiled from the FBR’s consolidated Income Tax Ordinance 2001 (amended up to 30 June 2026). Provided for general information only — not an official FBR publication and not legal or tax advice. Always verify against the official FBR text before relying on it for filing or any decision.