RRS implementation: FBR facing potential legal challenges

KARACHI: The Federal Board of Revenue (FBR) is facing significant internal backlash and potential legal challenges over the newly implemented Reward & Rating System (RRS), which was introduced as a replacement for the existing Performance Evaluation Report (PER) system.
The officers from both Pakistan Customs and Inland Revenue Services have expressed strong resentment against what they described as a 'discriminatory system designed to gratify blue-eyed officers,' according to sources familiar with the matter.
The controversy has escalated further when an advocate of the Supreme Court emailed a formal complaint to the Finance minister, FBR chairman, and other high-ranking officials, labelling the rewards as 'illegal donation of taxpayer's money' and a potential 'cognizable offence under Section 9 of the National Accountability Ordinance 1999.'
FBR revises procedure for monetary reward payment
The RRS, which was implemented for the period of July-December 2024, was initially presented as an initiative to objectively assess and uplift the performance of civil servants working in the FBR. However, sources claimed that the new system is 'inherently flawed, manipulative, and discriminatory.'
A key concern raised by officers is that many with 'decent repute' and 'impeccable careers' were either downgraded or not considered for rewards despite performing professionally and protecting the interests of the national exchequer, sources said.
One officer, in a letter addressed to the FBR chairman, expressed deep regret about participating in the multi-rater integrity and performance management feedback scheme. The officer claimed to have been directed to rate more than 45 colleagues, many of whom were 'complete strangers.'
'I have inadvertently contributed to unfair discrimination against several officers, under a forced categorization scheme, which was never my intention,' the officer stated in his letter.
The discontent has reached such levels that some officers are now declining the financial rewards they have been granted.
Business Recorder has obtained a copy of a letter from a customs officer, who formally declined a Category 'B' award that would have provided three additional salaries.
'As per the categorization framework, a Category 'B' rating implies a degree of inefficiency and questions an officer's integrity – a characterization I categorically reject,' the letter said.
'Throughout my service, I have upheld the highest standards of integrity, professionalism, and dedication, and I find it deeply inappropriate and disturbing to be placed in a category that does not reflect my conduct or performance.'
The officer further criticized the assessment mechanism, noting that it 'heavily relied on evaluations by officers – seniors and peers – who may have had little to no direct working relationship with the individuals they are rating.'
The letter concluded: 'Any reward system must be grounded in transparency, impartiality, and a well-informed understanding of an officer's actual performance and professional conduct. A system lacking these foundational principles risks compromising both credibility and morale.'
Meanwhile, the formal complaint by an advocate of the Supreme Court described the system as a 'daylight robbery on public money.'
According to the complaint, the reward structure is based on peer rating for integrity and quality of output for a six-month period, where each officer evaluates peers and is evaluated by 45 other officers.
The complaint stated: 'The reward distribution is substantial, with Grade 'A' officers reportedly receiving four months' worth of salary for each month of the evaluation period, totalling 24 salaries for six months. Grade 'B' officers receive 18 salaries, Grade 'C' officers 12 salaries, and Grade 'D' officers 6 salaries, while Grade 'E' officers receive nothing. The complaint also included a sample case where a Chief Collector of Customs in Peshawar allegedly received Rs 4.7 million in addition to regular salary.
Meanwhile, sources pointed out fundamental issues with the current RRS structure, arguing that the system primarily revolves around peer assessment, which they said failed to incorporate multilayered factors related to training and professional development. The manual intervention through an 'anomaly committee' is said to severely affect objectivity, allowing 'personal likes and dislikes' to influence decisions, they added.
The sources recommended that a team of well-reputed professionals, headed by the Finance minister, should be constituted to conduct a system audit and investigate the role of the anomaly committee in ensuring impartiality during manual interventions.
However, the legal challenges raised by the Supreme Court advocate questioned the very authority of the FBR to implement such a system, citing the section 20 of the FBR Act as requiring approval from the policy board for establishing performance standards and criteria for rewards.
According to the complaint, this approval was never obtained, rendering the entire reward distribution illegal.
Further allegations include irregularities in the constitution of the 'Board in Council' that approved the FBR Transformation Plan 2024, claiming that not all members were appointed by the federal government as required by law.
The complaint has also requested the Chairman of the National Accountability Bureau (NAB) to initiate proceedings against the FBR chairman and board members for causing loss to the public exchequer, demanding that the Accountant General of Pakistan Revenue (AGPR) immediately stop disbursement of rewards and initiate recovery proceedings against officers who have already received payments.
The complaint has also sought transparency by requesting the FBR to publish the list of officers graded A, B, C, and D on its web portal, and disclose instances where officers' grades were upgraded by the chairman or anomaly committee.
When contact, the FBR officials refused to give official comment on the matter.
Copyright Business Recorder, 2025

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