Islamabad: The government has introduced new reporting requirements under the Finance Act 2026, mandating banks and electronic money institutions (EMIs) to report financial transaction data of account holders with deposits or withdrawals exceeding PKR 100 million during a six-month reporting period to the Federal Board of Revenue (FBR).
The new provisions, effective from July 1, are aimed at enabling algorithm-based cross-matching of banking and tax data to identify cases of under-reported sales, overstated expenses and non-reporting of taxable information.
Under the Finance Act 2026, a new Section 165AB, titled Reporting of Financial Transaction Data by Banking Companies and Financial Institutions, has been inserted into the Income Tax Ordinance, 2001.
The law requires every banking company and EMI to electronically upload specified financial transaction data to a Central Data Hub, regardless of provisions contained in other laws, including the Banking Companies Ordinance, 1962, the State Bank of Pakistan Act, 1956, and the Protection of Economic Reforms Act, 1992.
The information to be reported will include details of account holders whose aggregate deposits or withdrawals exceed PKR 100 million in any or all of their bank accounts during a six-month reporting period. Banks will also provide information on deposits, withdrawals, opening and closing balances, peak credit balances and total credits.
According to the law, the shared information will be digitally processed and will not be directly accessible to income tax authorities during the cross-matching stage.
If the system detects a significant mismatch between banking and tax records, the information will be transferred to the FBR’s Compliance Risk Management (CRM) system through the National Faceless Centre for further action.
The FBR has also been tasked with ensuring strict confidentiality of the information received from banks and preventing any unauthorised disclosure or misuse, except where permitted by law.
The reporting period will cover two six-month intervals each financial year: July 1 to December 31 and January 1 to June 30. Banks will be required to submit the relevant data by January 31 and July 31, respectively.
The law defines “accounts” to include current, savings, call, fixed, term deposit and other bank deposit accounts, while “peak credits” refer to the highest credit balance across all accounts held by a customer during the reporting period.
The Central Data Hub will function as a secure virtual repository maintained through Pakistan Revenue Automation Limited (PRAL), while the CRM system will be used to identify and communicate tax compliance risks, including under-reporting of sales, overstatement of expenses and failure to report required information.
Samra Zulfiqar, a real estate analyst at Zameen.com, is passionate about finding projects that offer buyers the best returns. Her keen insights spotlight the market’s most promising opportunities.
