NADRA empowered to use artificial intelligence to increase tax base

Nadra empowered to share data with FBR by computing tax liability by using artificial intelligence

National Database and Registration Authority (NADRA) has been empowered by government to compute income and tax liability of any citizen by use of artificial intelligence, mathematical or statistical modelling or any other modern device or calculation method to increase the tax base of the country.

Legal powers to NADRA through promulgation of the Tax Laws (Third Amendment) Ordinance, 2021

These legal powers have been given to the NADRA through the promulgation of the Tax Laws (Third Amendment) Ordinance, 2021. The NADRA and the FBR can enter into a memorandum of understanding for a secure sharing of a person’s information.

Under the Tax Laws (Third Amendment) Ordinance, 2021, the NADRA shall, on its own motion or upon application by the Board, share its records and any information available or held by it, with the FBR, for broadening of the tax base or for the purposes of the Income Tax Ordinance 2001.

Data sharing by NADRA to FBR

The NADRA may submit proposals and information to the Board with a view to broadening the tax base; identify in relation to any person, whether a taxpayer or not: (a) income, receipts, assets, properties, liabilities, expenditures, or transactions that have escaped assessment or are under-assessed or have been assessed at a low rate, or have been subjected to excessive relief or refund or have been misdeclared or misclassified under a particular head of income or otherwise; (b) the value of anything mentioned in sub-clause (a) of clause (ii), if such value is at variance with the value notified by the Board or the district authorities, as the case may be, or if no such value has been notified the true or market value; and (iii) enter into a memorandum of understanding with the Board for a secure exchange and utilisation of a person’s information.

Determination of Taxable Income and tax Liability by NADRA

The NADRA may compute income and tax liability of anyone mentioned by use of artificial intelligence, mathematical or statistical modelling or any other modern device or calculation method.

The taxable income and tax liability computed by the NADRA shall be notified by the Board to the person in respect of whom such indicative income and tax liability has been determined, who shall have the option to pay the determined amount on such terms, conditions, installments, discounts, reprieves pertaining to penalty and default surcharge, and time limits that may be prescribed by the Board.

In case the person against whom a liability has been determined, does not pay such liability within the time prescribed, the Board shall take action under this Ordinance, upon the basis of tax liability computed.


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Amended Assessment on information and Data from NADRA

If the person against whom the liability has been determined pays such liability, such payment shall be construed to be an amended assessment order under section 120 or sub-section (1) of section 122 or sub-section (4) of section 122 as the case may be.

For the purposes of sub-sections (4) and (5), the Board may prescribe the extent of installments, reprieves pertaining to penalty and default surcharge and time limits, the FBR added.

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