The Federal Government Will Begin Scrutinising Bank Accounts With Deposits or Withdrawals Exceeding Rs100 Million From July 1, as Part of New Tax Compliance Measures Introduced Under the Finance Act 2026.
The initiative aims to strengthen tax enforcement by enabling algorithm-based cross-matching of banking data with tax records to identify possible tax evasion and financial discrepancies.
The new framework requires banks and Electronic Money Institutions (EMIs) to electronically submit specified financial transaction data to the Federal Board of Revenue (FBR), allowing the tax authority to detect under-reporting of sales, inflated business expenses, and unreported income.
New Reporting Rules Introduced Under Finance Act 2026
The Finance Act 2026 has inserted Section 165AB into the Income Tax Ordinance, 2001, introducing mandatory reporting of financial transaction data by banking companies and financial institutions.
Under the new law, every scheduled bank and Electronic Money Institution must upload specified financial information to a Central Data Hub through a secure electronic system.
The reporting requirement will apply regardless of protections available under other laws, including the Banking Companies Ordinance, 1962, the State Bank of Pakistan Act, 1956, and the Protection of Economic Reforms Act, 1992.
The government says the measure is intended to improve tax compliance while strengthening the digital monitoring of financial transactions.
Accounts Exceeding Rs100 Million To Be Monitored
The reporting requirement will apply to account holders whose total deposits or withdrawals exceed Rs100 million during a six-month reporting period across one or multiple bank accounts.
Banks will provide detailed information, including total deposits and withdrawals, opening and closing account balances, peak credit balances, and total credits during the reporting period.
The rules cover all major types of bank accounts, including current accounts, savings accounts, fixed deposits, term deposits, call accounts, and other deposit products.
For reporting purposes, “peak credit” refers to the highest credit balance recorded across all accounts held by an individual during the reporting period.
Secure Digital System To Cross-Match Tax And Banking Data
According to the new law, all reported information will first undergo algorithm-based digital processing through the Central Data Hub before any action is taken.
The government has stated that tax officials will not have direct access to banking information during the automated cross-matching stage.
Instead, the digital system will compare banking records with tax declarations to identify significant discrepancies.
If the system detects a substantial mismatch, the case will automatically be transferred to the Compliance Risk Management (CRM) system for further examination through the National Faceless Centre.
The automated process is designed to minimise manual intervention while improving the accuracy of tax compliance monitoring.
SBP May Establish Central Banking Data Repository
The Finance Act also authorises the State Bank of Pakistan (SBP) to establish, operate, and maintain a secure centralised virtual repository containing banking data.
The repository may include financial records, banking information, and transaction details linked to unique customer identifiers maintained by scheduled banks.
The system will collect, process, and share data with the FBR in accordance with prescribed legal and regulatory requirements.
Officials believe the digital infrastructure will improve coordination between financial institutions and tax authorities while supporting more efficient compliance monitoring.
Reporting To Take Place Twice Each Financial Year
The new reporting system will operate on a semi-annual basis.
The first reporting period will cover transactions between July 1 and December 31, with banks required to submit data by January 31.
The second reporting period will run from January 1 to June 30, with reporting due by July 31.
This regular reporting cycle is expected to provide the FBR with updated financial information throughout the year.
FBR Assures Confidentiality Of Banking Information
The Federal Board of Revenue has stated that strict confidentiality measures will apply to all banking information received under the new reporting regime.
According to the law, financial data submitted by banks cannot be disclosed or misused except where permitted under applicable legal provisions.
The government says the system has been designed to balance tax enforcement with the protection of sensitive financial information.
The introduction of mandatory reporting for high-value banking transactions represents one of the most significant digital tax enforcement measures under the Finance Act 2026, as Pakistan continues to modernise its tax administration and improve revenue collection through data-driven compliance systems.