ISLAMABAD: The Federal Board of Revenue (FBR) has initiated a new system to cross-match the financial records of high-risk taxpayers with their declared income and wealth, using data provided by banks.
As part of the Finance Act, 2025, a new Section 175AA has been added to the Income Tax Ordinance, 2001. This section authorizes the FBR to securely exchange tax and banking information of individuals flagged as high-risk. The aim is to ensure that taxpayers are accurately reporting their financial details and paying their fair share of taxes.
According to the FBR, this digital system allows the sharing of key taxpayer information—including income tax returns, sales tax data, and wealth statements—with scheduled banks. These banks, using automated algorithms, will then cross-match the information with actual bank transactions.
If the banks detect inconsistencies—such as bank deposits or withdrawals that don’t align with the information declared to the FBR—they will report these discrepancies back to the tax authority. The process is expected to significantly improve compliance risk management by identifying taxpayers who may be underreporting income or concealing wealth.
The FBR has assured that all shared data will be kept strictly confidential and will be used solely for tax enforcement and monitoring purposes.
