Banks provide statements of account holders to tax authorities

Banks provide statements of account holders to tax authorities

ISLAMABAD – Banks are obligated to furnish statements of deposits and withdrawals of account holders to the Federal Board of Revenue (FBR).

The requirement, outlined in the Income Tax Rules, 2002 (updated up to September 08, 2020), establishes a framework for banking companies to provide specific information, including account holders’ deposits statements, credit card payments statements, cash withdrawal statements, profit on debt statements, and any other data as per the Board’s requisition.

Information to be Provided by Banks

The information to be provided by banking companies to the FBR under Section 165A of the Income Tax Ordinance, 2001, includes:

1. Account Holders Deposits Statement

2. Credit Card Payments Statement

3. Cash Withdrawal Statement

4. Profit on Debt Statement

5. Additional Information as Required by the Board

Reporting and Authorization

Authorized Persons:

1. Nomination of Banking Company Officer:

• Each reporting banking company is required to nominate a banking company officer within thirty days of the rules coming into force.

• If not nominated within the specified time, the President or principal officer stationed at the head office shall be considered the banking company officer.

2. Responsibility of Banking Company Officer:

• The designated banking company officer is responsible for providing the required information to the Federal Board of Revenue.

Time of Furnishing Information:

1. Monthly Statements:

• Banking company officers must furnish monthly account holders’ deposits statements, credit card payments statements, and cash withdrawal statements specified in Form A, Form B, and Form C, respectively.

• Submission is required within fifteen days of the end of the preceding calendar month.

2. Annual Profit on Debt Statement:

• Banking company officers are mandated to provide an annual profit on debt statement specified in Form D for the immediately preceding calendar year.

• Submission is required within three months of the end of the preceding calendar year.

3. Additional Information:

• Banking company officers are obligated to furnish any additional information and documents requested by the Board within the time stipulated by the Board.

Enhancing Transparency and Compliance

The provision for banks to submit detailed statements and information to the FBR is aimed at enhancing transparency and strengthening the tax administration system. By ensuring access to accurate and timely financial data, the FBR aims to streamline the process of assessing tax liabilities and preventing potential tax evasion.

The requirement for banking companies to provide detailed statements and information to the FBR under income tax laws signifies a proactive approach towards promoting fiscal transparency and compliance. The structured reporting framework outlined in the Income Tax Rules, 2002, emphasizes the importance of timely and accurate information exchange, enabling the tax authorities to effectively monitor financial transactions and uphold the integrity of the taxation system. As the banking sector fulfills its reporting obligations, it contributes to a more accountable and transparent financial ecosystem.