FBR Notice Received? How to Read, Respond and Avoid Penalties

An FBR notice arrives by email, SMS or in your IRIS inbox and the instinctive reaction is either panic or avoidance. Both are wrong. Most notices are automated or routine: a return not filed, a figure that does not reconcile, a request for supporting documents. What turns a routine notice into a serious problem is silence, because the Ordinance allows the department to proceed and assess on its own view when a taxpayer does not engage.

First: work out what you have actually received

Every notice tells you four things. Find them before doing anything else.

Verify the notice is genuine before acting on it. A real notice appears in your IRIS inbox. Fraudulent messages imitating FBR circulate widely, typically demanding immediate payment to a personal account or asking you to click a link and log in. FBR does not demand payment to a private bank account, and it does not ask for your password. Log in to IRIS directly rather than through any link.

The notices you are most likely to receive

Section numbering and procedure are amended by successive Finance Acts, so confirm the current provision rather than relying on numbering quoted in an older article. What is stable is the structure: a notice identifies a deficiency, gives you an opportunity to respond, and prescribes a consequence if you do not.

How to respond through IRIS

1. Log in to IRIS directly at the official address, not through a link in an email.
2. Open the notice in your inbox and read it in full, including annexures.
3. Note the deadline and diarise it with a reminder several days earlier.
4. Assemble the evidence - bank statements, salary certificate, invoices, withholding certificates, purchase and sale documents.
5. Draft a reply that answers the specific question. A short, structured response addressing each point beats a long general narrative.
6. Attach clearly named documents in a logical order.
7. Submit through IRIS and save the acknowledgement.
8. If you need more time, request an adjournment in writing before the deadline rather than letting it pass.

A request for extension filed before the deadline is an ordinary procedural step. The same request filed afterwards is a request to excuse a default. The difference costs nothing and materially changes your position.

What happens if you ignore it

This is where routine matters become expensive:

• Best-judgement assessment. Where a taxpayer does not respond, the department may assess income on the material available to it. Those assessments are rarely favourable, and the burden then shifts to you to displace them.
• Penalties and default surcharge accrue on top of the tax - see our guide to penalties and default surcharge.
• Recovery measures, which can include attachment of bank accounts. If that has happened, see bank account freezing.
• Loss of filer status, which raises withholding on property, banking and vehicle transactions - see filer vs non-filer.
• Escalation to further proceedings in serious cases.

Almost none of that follows from having a disputed tax position. It follows from not engaging with a notice that gave you the opportunity to explain.

If you disagree with the outcome

Disagreeing is legitimate and there is a defined route. In outline: respond to the notice on the merits, and if an order is passed against you, pursue the appeal route rather than simply refusing to pay.

1. Reply substantively first. Many disputes resolve at this stage because the department simply lacked a document.
2. Appeal to the Commissioner (Appeals) within the prescribed period if an adverse order is passed.
3. Appellate Tribunal Inland Revenue as the next tier.
4. Higher courts on questions of law.

Appeal periods are short and strictly applied. Our guide to tax appeals sets out the tiers in detail. The practical point is that missing an appeal deadline can leave you with an unappealable demand even where you were substantively right.

How to stop receiving them

• File on time, every year, even a nil return where you are required to file.
• Reconcile before filing. Most automated notices are triggered by a mismatch between your declared figures and third-party data such as withholding statements and bank information.
• Declare all sources, including property, rental income, foreign remittances and profit on debt.
• Keep withholding certificates. They are the evidence for tax already deducted, and reconstructing them later is painful.
• Keep your IRIS contact details current, since notices go to the registered email and mobile.
• Check your IRIS inbox periodically rather than waiting for an alert that may not arrive.

The most common trigger we see is a taxpayer whose declared income does not reconcile with the withholding data FBR already holds. Running that reconciliation before you file, rather than after a notice arrives, prevents most of these.

When to get professional help

You can handle many notices yourself, particularly a straightforward request to file a return or supply a document. Get help where:

• The notice proposes to amend an assessment or you have been selected for audit.
• Significant sums or several tax years are involved.
• You do not understand what is being alleged.
• You have already missed a deadline.
• Recovery has started or an account has been attached.
• You intend to appeal.

For the decision on whether to handle it yourself, see our comparison: handle an FBR notice yourself or hire a consultant.

Frequently asked questions