Islamabad, January 10, 2019 – The Federal Board of Revenue (FBR) has issued a new mandate that compels banks to provide details of individuals receiving profits on their deposits exceeding a certain threshold.
This requirement is aimed at enhancing tax compliance and transparency in financial transactions.
The FBR has formally included this provision in the statute through SRO 29(I)/2019. The amendment to the Income Tax Rules, 2002 now obligates banks to furnish information on individuals who receive profits on debt exceeding one million rupees for filers and five hundred thousand rupees for non-filers during a financial year. This information will include the account holder’s name, Computerized National Identity Card (CNIC) number, current address, and details of the tax deductions made.
The main objective behind this initiative is to improve the monitoring of high-value financial transactions and to ensure that individuals comply with their tax obligations. By requiring banks to report on these deposits, the FBR aims to reduce tax evasion and promote a more transparent financial system.
The FBR’s mandate, however, also includes certain relaxations in reporting requirements for banks. Notably, it withdraws the necessity for banks to report on current transaction details, provide statements for written-off loans, and grant online access to the central database. These changes aim to simplify the reporting process while maintaining a focus on high-value depositors.
This new requirement serves as part of a broader effort to enhance tax collection and ensure that both filers and non-filers of income tax meet their obligations. It also seeks to strengthen the financial regulatory framework in Pakistan and reduce the potential for tax evasion in high-value financial transactions.
The banking sector will play a pivotal role in implementing these reporting requirements and ensuring that they are in compliance with the law. This initiative aligns with the global trend of improving financial transparency and combating tax evasion and money laundering. The FBR’s action reflects Pakistan’s commitment to creating a more transparent and accountable financial system.
