ISLAMABAD: The Federal Board of Revenue (FBR) has made it mandatory for banks and other financial institutions to electronically provide information on account holders involved in high-value deposits and withdrawals for automated tax cross-matching.
The FBR issued Income Tax Circular No. 2 of 2026-27 to explain major amendments to the Income Tax Ordinance, 2001, introduced through the Finance Act, 2026.
Under the newly inserted Section 165AB, every banking company and Electronic Money Institution will be required to electronically upload prescribed information to the Central Data Hub regarding account holders whose deposits or withdrawals exceed Rs100 million during a reporting period.
The FBR said the information would be subjected to algorithmic cross-matching against tax and banking data.
Importantly, the digitally processed information will not be directly visible to income tax authorities during the initial cross-matching process.
Only cases involving a gross mismatch will be transferred to the FBR’s Compliance Risk Management (CRM) system for further action by the National Faceless Centre.
New reporting mechanism for high-value accounts
The amendments also introduce definitions for several terms associated with the new reporting mechanism, including “reporting period”, “specified date”, “accounts”, “peak credits”, “Central Data Hub” and “compliance risk management”.
These definitions establish the framework for collecting and processing information on significant banking activity through the centralised digital system.
The FBR said confidentiality safeguards had also been incorporated into the framework governing the handling and processing of financial information.
SBP empowered to establish centralised banking data repository
The Finance Act, 2026 has also amended Section 175AA by adding a new paragraph (c), empowering the State Bank of Pakistan (SBP) to establish, operate and maintain a secure centralised virtual repository of banking data.
The repository may contain prescribed information, records and financial transactions of persons maintained by scheduled banks.
The new provisions are aimed at strengthening automated tax administration by enabling the FBR to identify significant discrepancies between taxpayers’ declared financial information and their banking activity.
FBR expands digital tax compliance
The move forms part of the government’s broader drive towards greater digitalisation of tax administration and enhanced use of financial data for compliance and risk assessment.
By introducing automated cross-matching and a centralised data framework, the revised system is expected to help identify potential discrepancies while limiting direct access to processed information during the initial screening stage.
