ICAP proposes monthly CNIC-linked banking data reporting and AI-driven analysis to help FBR detect undeclared income and improve tax compliance
The Institute of Chartered Accountants of Pakistan (ICAP) has called for the Federal Board of Revenue (FBR) to significantly expand its use of banking data, recommending monthly digital transaction reporting to improve tax compliance and curb Pakistan’s large informal economy.
In its latest budget proposals, ICAP said banks already provide limited withholding tax information on profit earned on deposits and cash withdrawals above Rs50,000. However, it argued that the FBR does not currently receive full account-level transaction data needed for more comprehensive enforcement.
ICAP proposed that all banks submit monthly digital extracts of transactions linked to Computerized National Identity Card (CNIC) numbers, covering both debit and credit activity above Rs10,000.
The institute said such data could be integrated into an artificial intelligence-based analytics system to flag potential tax evasion and undocumented business activity.
“Enhanced data integration would significantly improve detection of under-reported income and circular transactions,” ICAP said in its recommendations, adding that business income routed through personal accounts often goes unreported for tax purposes.
The proposal also highlighted the risk of artificial turnover inflation through circular banking transactions, a practice that can distort financial records and complicate tax assessments.
ICAP further suggested that AI-based cross-matching of banking data with declared income tax returns and profit-on-deposit records could help identify discrepancies and improve voluntary compliance.
The institute said expanded use of digital banking records would strengthen enforcement capacity and support government efforts to widen Pakistan’s tax base, which remains narrow relative to the size of its economy.
