Banks and electronic money institutions must report transactions exceeding Rs100 million every six months under new digital compliance regime
ISLAMABAD: The federal government has significantly expanded the Federal Board of Revenue’s (FBR) powers to obtain financial information on high-value bank account holders under the Finance Act, 2026, marking one of Pakistan’s most far-reaching reforms in technology-driven tax enforcement.
The Finance Act has inserted a new Section 165AB into the Income Tax Ordinance, 2001, requiring banks and Electronic Money Institutions (EMIs) to electronically submit specified financial transaction data to the FBR’s Central Data Hub for automated cross-matching with taxpayers’ declared income and assets.
The new provision overrides the Banking Companies Ordinance, 1962, the State Bank of Pakistan Act, 1956, the Protection of Economic Reforms Act, 1992, and any other conflicting laws, allowing the FBR to obtain designated banking information directly from financial institutions.
Rs100 million reporting threshold
Under the new law, banks and EMIs will be required to report account holders whose aggregate deposits or withdrawals exceed Rs100 million during a six-month reporting period across one or more accounts.
The information to be submitted includes:
• Opening and closing balances.
• Details of deposits and withdrawals.
• Peak credit balances.
• Total credits during the reporting period.
The reporting requirement applies to all categories of deposit accounts, including current accounts, savings accounts, fixed deposits, term deposits, call deposits and other deposit accounts maintained by individuals or entities.
Automated screening before FBR access
The Finance Act introduces an automated screening mechanism intended to limit human access to banking data during the initial review stage.
According to the law, the information uploaded by financial institutions will first be processed entirely through the Central Data Hub using algorithmic cross-matching. At this stage, the financial information will not be visible to income tax officials.
The system will compare banking transactions with taxpayers’ declared income, assets and other tax records to identify significant discrepancies.
Only where the automated system detects a substantial mismatch will the case be transferred to the FBR’s Compliance Risk Management (CRM) system for further examination.
Any subsequent proceedings will be handled through the National Faceless Centre, reducing direct interaction between taxpayers and tax officials.
Confidentiality safeguards
The Finance Act also places a statutory obligation on the FBR to maintain strict confidentiality of all banking information received from financial institutions.
Under the law, the Board must ensure that such information is not disclosed or misused and remains protected under applicable confidentiality provisions governing commercial banking, except where disclosure is specifically authorised under the new section.
Reporting schedule
Financial institutions will submit data twice each financial year under the following schedule:
• July 1 to December 31: Report to be submitted by January 31.
• January 1 to June 30: Report to be submitted by July 31.
Strengthening digital tax enforcement
The Central Data Hub, operated through Pakistan Revenue Automation Limited (PRAL), will function as a central repository for banking information and tax records.
Using advanced analytics, the integrated Compliance Risk Management system will identify potential tax compliance risks, including under-reporting of income, understatement of sales, overstatement of expenses and undisclosed assets or financial transactions.
Tax experts believe the new reporting framework represents a significant shift towards data-driven tax administration, enabling the FBR to detect concealed taxable income more efficiently while reducing reliance on manual investigations. The measure is expected to improve tax compliance, broaden documentation of the economy and strengthen the government’s ability to identify high-value financial activity through digital data matching.
