The government has decided to closely monitor the financial activities of bank account holders whose total cash deposits or withdrawals exceed Rs100 million during any six month reporting period. The new system will take effect from July 1, according to reports on Tuesday.
According to the details, banks and the Federal Board of Revenue (FBR) will automatically compare banking and tax records through a digital system.
Finance Act 2026
According to the Finance Act 2026, the reason this step is being taken is to detect people or businesses that underreport sales, show higher expenses than they actually have, or hide tax-related information from the authorities.
For this reason, a new Section 165AB has been added to the Income Tax Ordinance 2001. It needs all banks and electronic money institutions to upload details of certain financial transactions to a central data hub through an electronic system.
If the total amount deposited into or withdrawn from one or more bank accounts of an account holder is more than Rs100 million during a six-month reporting period, the bank has to report the details.
The information will include total deposits and withdrawals, the opening and closing balance of the account, the highest credit balance during the reporting period, and the total amount credited.
The Finance Act says that the data matching process will be fully digital and automatic. At this stage, income tax officers will not have direct access to the information.
What will happen if system finds difference
If the system finds a major difference between banking records and tax records, the case will be sent to the Compliance Risk Management System for further review. After that, the National Faceless Centre will see the case.
The law also says the FBR must keep all banking information confidential. The data cannot be shared or misused except where allowed by law.
Reporting system twice per year
The reporting system will have two periods every financial year. The first period will run from July 1 to December 31 and reports must be submitted by January 31.
The second period will run from January 1 to June 30 and reports must be submitted by July 31.
Who will be affected
The law applies to all types of bank accounts. These include current, savings, call, fixed deposit and term deposit accounts.
The term “peak credit” means the highest total credit balance in all of an account holder’s bank accounts during the reporting period.
