FBR to use AI to detect tax return discrepancies, warns of heavy penalties

According to sources, the Federal Board of Revenue (FBR) has decided to impose fines on taxpayers providing inaccurate information in income tax forms, concealing assets or tampering with financial data.

Sources stated the FBR has data on properties and assets owned by tax filers around the country which will be used to check the information declared in their income tax forms.

The FBR will automatically match the data submitted in tax returns with the data already available in its database to discover any irregularities. Sources said that artificial intelligence (AI) will also be used to check information and discover probable abnormalities.

Taxpayers who were caught hiding assets or doctoring paperwork were told they would face hefty penalties, sources said. Sources stated income tax department could impose fines up to 75 per cent of salaries for salaried persons filing wrong income tax filings.

They said that a fee of Rs1,000 per day might also be imposed if the penalty was not paid within the stipulated period.

Tax filers have a chance to correct problems in their income tax filings before October 15. Sources advised the taxpayers to cross-check facts stated in their return, including income and asset details and make required revisions within the time limit.

The move comes as the FBR is ramping up the use of automated technologies and artificial intelligence to scrutinize tax returns and find differences between the information provided and the accessible data. Dawn, in an October 7 report, stated the FBR has suggested regulations for electronic assessment of individual tax returns so that its automated system can identify possible factual and legal mistakes before taking further action.