FBR Begins Monitoring High-Value Bank Transactions July 1

Effective 1 July 2026, the Federal Government will implement a new banking data reporting framework under the Finance Act, 2026, enabling the scrutiny of bank account holders whose aggregate deposits or withdrawals exceed Rs100 million during any six-month reporting period of a financial year.

According to Business Recorder, the initiative is designed to strengthen tax compliance through automated cross-matching of banking and taxation records to identify potential cases of under-reported sales, overstated business expenses, and non-disclosure of taxable income.

To facilitate this framework, the Finance Act, 2026 has inserted Section 165AB, titled “Reporting of Financial Transaction Data by Banking Companies and Financial Institutions,” into the Income Tax Ordinance, 2001.

Under the newly introduced provision, every banking company and Electronic Money Institution (EMI) will be legally required to electronically transmit specified financial transaction data to the Central Data Hub for automated algorithm-based reconciliation of banking and tax information.

The reporting obligation will apply notwithstanding any contrary provisions contained in other applicable laws, including the Banking Companies Ordinance, 1962, the State Bank of Pakistan Act, 1956, and the Protection of Economic Reforms Act, 1992.

Banks and EMIs will be required to report details of account holders whose cumulative deposits or withdrawals exceed Rs100 million during a prescribed reporting period across one or multiple accounts maintained with the institution.

The information to be furnished will include particulars relating to deposits, withdrawals, opening and closing account balances, peak credit balances, and total credits recorded during the reporting period.

The Finance Act further provides that the information submitted by financial institutions will initially be processed exclusively through an automated digital system and will not be directly accessible to Income Tax Authorities while algorithmic cross-matching is being carried out.

Where the digital system identifies a material discrepancy between banking transactions and tax information, the relevant case will automatically be transferred to the Federal Board of Revenue’s Compliance Risk Management (CRM) system for further examination through the National Faceless Centre in accordance with applicable legal procedures.

The FBR has also been placed under a statutory obligation to maintain strict confidentiality of all banking information received and to prevent its disclosure or misuse except where expressly permitted under the applicable provisions of law.

The legislation prescribes two reporting periods each financial year: 1 July to 31 December and 1 January to 30 June. Banking companies and EMIs must electronically submit the relevant information by 31 January and 31 July, respectively.

The Finance Act further authorises the State Bank of Pakistan (SBP) to establish, operate, and maintain a secure centralised virtual repository containing banking records and financial transaction data maintained by scheduled banks through unique identifiers prescribed by the FBR.

For the purposes of the law, the term account includes current, savings, call, fixed deposit, term deposit, and all other forms of bank deposit accounts. Peak credit refers to the highest aggregate credit balance maintained by an account holder across all reportable accounts during the relevant reporting period.

The legislation also defines the Central Data Hub as the virtual data repository maintained by the FBR through Pakistan Revenue Automation (Private) Limited (PRAL), while the Compliance Risk Management (CRM) System refers to the computerised platform used to identify, evaluate, and communicate tax compliance risks for further enforcement action.