Karachi, September 15, 2023 – The Federal Board of Revenue (FBR) has taken a significant step by deciding to impose penalties on banks for their failure to provide details of account holders, according to official sources.
These sources have revealed that banks are obligated to furnish details of account holders and their transactions to tax authorities. This information plays a pivotal role in identifying new taxpayers and contributing to the formal documentation of the economy.
To ensure compliance by financial institutions, the FBR has introduced monetary penalties for banks that do not meet these reporting requirements.
According to the sources, in cases where a reporting financial institution fails to adhere to the provisions of section 165B of the Income Tax Ordinance, 2001, or the Common Reporting Standard Rules outlined in Chapter XIIA of the Income Tax Rules, 2002, such a reporting financial institution will be liable to pay a penalty of Rs. 10,000 for each default. Additionally, they will incur an additional penalty of Rs. 10,000 for each month until the default is rectified.
Similarly, if a reporting financial institution submits an incomplete or inaccurate report in accordance with the provisions of section 165B of the Ordinance or the Common Reporting Standard Rules in Chapter XIIA of Income Tax Rules, 2002, they will be subject to the same penalties.
Furthermore, financial institutions that fail to obtain valid self-certification for new accounts or provide false self-certification by Reportable Jurisdiction Persons under the Common Reporting Standard Rules will also be subject to these penalties.
These measures underscore the government’s commitment to enhancing transparency and accountability in the financial sector. The penalties are intended to ensure that banks fulfill their obligations regarding the provision of account holder information, which is crucial for effective tax administration and promoting financial integrity.