FBR mandates CRM system for all new tax audits starting September 2026
Islamabad: The Federal Board of Revenue (FBR) has issued a landmark directive requiring all Inland Revenue officers to use the Compliance Risk Management (CRM) System for initiating any new audit proceedings under the Income Tax Ordinance, 2001.
The new rule, notified through Income Tax Circular No. 03 of 2026-27, takes effect from September 1, 2026, and supersedes the earlier Circular No. 01 of 2026-27 issued on August 31, 2026, along with its corrigendum.
According to the circular, no new audit proceedings under Section 177 of the Income Tax Ordinance shall be initiated unless the case has been selected and assigned through the CRM System. Any proceedings initiated in violation of this directive will be considered unauthorized and may be rendered void ab initio by the competent authority.
The FBR stated that the move is aimed at bringing transparency, uniformity, and objectivity in the selection of cases for audit.
For audits already initiated and in progress as of August 31, 2026, the circular allows them to be concluded under the existing framework. However, any fresh audit proceedings in such cases issued on or after September 1, 2026, must comply with the CRM-based selection process.
The circular also outlines a strict exemption mechanism. Any request for exemption from the CRM-based selection process must be submitted in writing to the Member (Inland Revenue – Operations) with complete justification. No exemption will be granted unless specifically approved in writing by the Member (IR-Operations) or an officer duly authorized by him.
All Chief Commissioners Inland Revenue (CCIRs) have been directed to ensure strict compliance within their respective jurisdictions.
The Directorate-General (Compliance Risk Management) has been tasked with ensuring uninterrupted operability of the CRM System and providing necessary technical support, training, and guidance to field formations. Any system downtime or technical issue affecting the CRM System must be reported to the Member (IR-Operations) within 24 hours.
The circular states that it shall have overriding effect over any previous circulars, instructions, standard operating procedures, or administrative orders inconsistent with the mandatory use of the CRM System for initiating audit proceedings. All such prior instructions stand superseded to the extent of inconsistency.
The directive has been issued in exercise of the powers vested in the FBR under Section 214 of the Income Tax Ordinance, 2001, read with the rules and regulations framed thereunder, and in furtherance of the policy to digitize and automate tax administration.
The circular was signed by Naila Ashraf Khan, S.A. to Member (IR-Operations), and has been distributed to the SA to Chairman FBR, all Chief Commissioners-IR, LTOs/MTO/CTOs/RTOs, and the FBR Webmaster for uploading.
