Filing a return
Selected for a Tax Audit
There are two routes. The Commissioner can select you under section 177, and must record his reasons in writing and communicate them to you. The Board can ballot you under section 214C, and there the duty to give reasons is expressly disapplied. Separately, clause 105A gives immunity from selection where you were selected in any of the preceding three tax years.
We do this for clients:Tax Advisory and FBR Representation in Pakistan
Where these figures come from
- Statutory basis
- Income Tax Ordinance, 2001, as amended by the Finance Act 2026, for tax year 2027 (1 July 2026 to 30 June 2027).
- Last checked against the statute
- by BarrioVibe, which files income tax returns through FBR IRIS.
These figures are an estimate computed from the rates above, not tax advice for your situation. Your return depends on facts a form cannot see, so treat the number as a starting point and speak to us before you file on it.
The two routes compared
They are expressly independent. Identical Explanations in both sections say the Commissioner's power under section 177 is independent of the Board's, and nothing in section 214C restricts it.
| Section 177 | Section 214C | |
|---|---|---|
| Who selects | The Commissioner | The Board, by computer ballot |
| Basis | The Commissioner's own reasons | Random or parametric |
| Must you be told why | Yes, reasons recorded and communicated | No, the proviso is disapplied |
| Are the parameters public | Not applicable | No, section 214C(1A) keeps them confidential |
How far back the audit can reach
The second proviso to section 177(1) sets a six-year limit on calling for records. That is a longer window than the five years in section 122 for amending an assessment, and the difference is worth holding in mind: the power to ask for documents and the power to change an assessment do not run out together.
There is no monetary or turnover threshold below which selection does not apply. We checked the whole of both sections for one and there is none. The only turnover-linked carve-out is the SME regime in the Fourteenth Schedule, where sections 177 and 214C do not apply to an SME that has opted for the fixed turnover regime, and selections of SMEs under normal law are capped at five per cent of the relevant population.
Whether you can find out why the ballot picked you
Section 214C(1A), added by the Finance Act 2013, requires the Board to keep the selection parameters confidential, and section 214C(2) removes the duty to give reasons. On the face of the statute, therefore, you cannot.
It has been reported that the Lahore High Court held in 2019 that a taxpayer once selected should be informed of the particular risk parameter applied to them if they ask, grounded in the constitutional rights to information. We have that from press reporting rather than from the judgment, we do not know whether it was appealed, and we cannot say how field practice treats it. So the honest position is that the statute says no, a superior court is reported to have said otherwise, and this is worth raising with an adviser rather than treating as settled either way.
Questions
The questionspeople ask
Will FBR tell me why I was selected for audit?
It depends who selected you. Under section 177 the Commissioner must record reasons in writing and communicate them to you. Under a section 214C Board ballot that duty is expressly disapplied, because section 214C(2) applies section 177 except the first proviso to sub-section (1).
Can FBR audit me two years running?
Generally not. Clause 105A of Part IV of the Second Schedule disapplies sections 177 and 214C for selection where your affairs were selected for audit in any of the preceding three tax years. The Commissioner may still select under section 177 with the Board's approval.
Is the audit immunity three years or four?
Three. It was four until the Finance Act 2025, which also changed the trigger from having been audited to having been SELECTED for audit, so selection alone starts the clock whether or not the audit was completed.
What happens if I do not produce records in an audit?
The Commissioner may assess to the best of his judgement under section 121(1)(d), and the assessment based on your filed return is of no legal effect. Section 177(2AA) also allows assessment on sectoral benchmark ratios where records are not produced, are incomplete or are unexplained.
How many years back can an audit go?
The second proviso to section 177(1) sets a six-year limit on calling for records. Note that is longer than the five-year limit in section 122 for amending an assessment, so the two powers do not expire together.
Is there a turnover threshold below which I cannot be audited?
No. Neither section 177 nor section 214C carries one. The only turnover-linked carve-out is the SME regime, where the sections do not apply to an SME on the fixed turnover regime and ballot selections of SMEs are capped at five per cent.
Does late filing automatically trigger an audit?
Not any more. Section 214D, which did that, was omitted by the Finance Act 2018. It still appears in the consolidation as footnoted omitted text, which is why pages continue to describe it as current.
Can I demand to know which risk parameter selected me?
Section 214C(1A) requires the Board to keep the parameters confidential and section 214C(2) removes the duty to give reasons, so on the statute no. The Lahore High Court is reported to have held otherwise in 2019, but we have that from press reporting rather than the judgment and cannot say how it is applied.
Selected, and not sure what to produce?
An audit turns on what you can evidence and by when. If a notice has arrived, the useful conversation happens before the records deadline rather than after a best-judgement assessment.