Bank transactions above Rs. 100 million to be reported

ISLAMABAD: The government of Pakistan has introduced a new law requiring banks and financial institutions to report details of high-value banking transactions to help combat tax evasion, with the measure coming into effect on 1 July.

Under the Finance Act 2026, the data of all those bank account holders whose cumulative deposits or withdrawals exceed Rs. 100 million over six months would be provided for digital scrutiny.

According to the Finance Act 2026, a new provision Section 165AB has been added to the Income Tax Ordinance, 2001, titled “Reporting of Financial Transaction Data by Banking Companies and Financial Institutions.”

Under the new law, all banking companies will be required to upload specified financial transaction data to a ‘central digital data hub’, regardless of any conflicting banking or financial regulations, so as to analyze by using computer algorithms to compare banking records with taxpayers’ declared income and tax information.

What information will be shared?

Banks will share the data of account holders whose collective transactions across one or more accounts reach or exceed Rs.100 million during a six-month reporting period.

The data to be shared includes details of deposits and withdrawals, opening and closing account balances, peak credit balance during the reporting period, and total credits received.

This reporting will take place twice during a fiscal year, first from1 July to 31 December must be submitted by 31 January, while information for the second period from 1 January to 30 June must be filed by 31 July.

The new law applies to all major types of bank accounts, including current, savings, fixed deposit, and term deposit accounts.

According to the law, the information will be processed through a fully digital system. During the initial cross-matching stage, the data will not be directly accessible to income tax officials, so as to safeguard account holders from the risk of harassment or misuse.

If the system identifies a significant difference between an individual’s tax declarations and banking activity, the Federal Board of Revenue’s (FBR) automated system will refer this case through the Compliance Risk Management system to the National Faceless Centre for further legal action.

The law also authorizes the State Bank of Pakistan (SBP) to establish a secure, centralized virtual database for storing financial transaction records maintained by scheduled banks.

The Federal Board of Revenue (FBR) has also been placed under a legal obligation to ensure the confidentiality of the information received from banks and to prevent any unauthorized disclosure or misuse of the data.