Section 175AA of the Income Tax Ordinance, 2001, enables the FBR and scheduled banks to cross-match tax declarations with banking data, with support from the State Bank of Pakistan.
The State Bank of Pakistan (SBP) may assist the Federal Board of Revenue (FBR) in exchanging banking information relating to high-risk persons during Tax Year 2027, as part of measures to identify discrepancies between declared income and financial records.
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The FBR has issued the Income Tax Ordinance, 2001, updated up to June 30, 2026, for Tax Year 2027, covering the period from July 1, 2026, to June 30, 2027. Section 175AA of the ordinance outlines the framework for exchanging banking and tax information concerning high-risk persons.
Under the provision, the FBR may share information obtained from tax declarations with scheduled banks in Pakistan. The information can be used to cross-match taxpayers’ declarations against banking data through data-based algorithms, in accordance with the prescribed procedures.
Scheduled banks are required to provide the FBR with the final results where banking information differs from the results generated by the prescribed algorithms.
Section 175AA also authorises the SBP to establish, operate and maintain a secure, centralised virtual repository of banking data. The repository may contain information, records and financial transactions maintained by scheduled banks, organised using unique identifiers prescribed by the FBR.
The SBP may collect and provide the relevant data and results to facilitate the information-sharing and cross-matching process outlined in the law.
The provision applies notwithstanding other laws currently in force, including the Banking Companies Ordinance, 1962, Section 216 of the Income Tax Ordinance and regulations made under the State Bank of Pakistan Act, 1956.
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However, the law places restrictions on the use of the information. All data received under Section 175AA must be used only for tax and related purposes and kept confidential.
The framework establishes a mechanism for the FBR and scheduled banks to identify discrepancies between tax declarations and banking records, while allowing the SBP to support secure data exchange. Its implementation is intended to strengthen tax compliance and help authorities examine potential inconsistencies in taxpayers’ reported financial information.