ISLAMABAD, June 22, 2025 – The Federal Board of Revenue (FBR) has unveiled a key initiative under the Finance Bill 2025-26 aimed at curbing undocumented economic activity by capturing high-value banking transactions made by unregistered businesses across Pakistan.
During a session of the National Assembly Standing Committee on Finance, FBR Chairman Rashid Mahmood Langrial discussed the proposed insertion of Section 175AA, titled Exchange of Banking and Tax Information Related to High-Risk Persons, into the Income Tax Ordinance. The purpose of this section is to enable FBR to collaborate with commercial banks to identify unreported or suspicious financial transactions being conducted outside the tax net.
Chairman Langrial emphasized that the FBR would provide banks with batches of Computerized National Identity Card (CNIC) numbers of suspected individuals, rather than sharing confidential details such as income tax returns. The focus, he explained, is on identifying red flags based on transactions that exceed a certain threshold. That threshold will be clearly defined and prescribed, ensuring targeted action against large-scale undocumented financial flows.
To strengthen this information-sharing mechanism, Langrial proposed the inclusion of a clause ensuring the State Bank of Pakistan’s full support in implementing Section 175AA. He clarified that the primary objective is not to burden legitimate taxpayers, but rather to expose hidden sectors and bring informal economic activity into the documented economy.
Committee members raised concerns about a sub-clause that permitted the FBR to share personal and financial details of taxpayers with scheduled banks. In response, the FBR chairman agreed to revise the language of the clause to limit shared information strictly to CNICs. He reassured lawmakers that income and wealth data would remain protected.
Furthermore, Langrial proposed establishing a centralized banking repository to track transactions more effectively. Such a system would prevent individuals from evading detection by splitting transactions across multiple bank accounts.
This proposed framework marks a significant step in the FBR’s ongoing drive to document the economy, minimize tax evasion, and enhance transparency in financial dealings across the country. If enacted, it would give tax authorities the tools to identify, track, and eventually tax unregistered business transactions that have long evaded scrutiny.