The Federal Board of Revenue (FBR) is anticipating a real-time system that would provide real-time data of all financial transactions from all banks. The initiative will bring the untaxed economy under the tax net by identifying tax evasion.
Prime Minister Imran Khan had ordered the Ministry of Law and Justice, State Bank of Pakistan (SBP) to make necessary amendments to the banking laws. The amendments would share real-time data of banking transactions with the FBR. The new amendments will be made a part of banking laws and regulations at the start of 2020.
Over the years, different laws have been enacted that bound banks to provide FBR with the data of all the financial transactions. However, the banks remain non-compliant with these laws citing different excuses.
The Finance Act 2013 incorporates clauses of information sharing into the Income Tax Ordinance 2001.
According to Section 165-A of the Income Tax Ordinance 2001, all banks are bound to give information of account holders to the tax authorities.
Moreover, it also directs the banks to provide a list of individuals who:
- Withdraw cash of Rs. 50,000 per day
- Withdraw cash of Rs. 1 million per month
- Deposit Rs. 10 million per month
- Make a credit card payment of Rs. 250,000 per month
- Receive profit on debt above Rs. 500,000 per year
Chairman FBR, Shabbar Zaidi, had also ordered banks to give the details of banking transactions voluntarily.
Despite necessary provisions in the banking laws and regulations, banks rarely provide the above-mentioned information to the tax authorities.
According to officials of FBR, due to lack of such information, untaxed and black economy is flourishing in the country. The officials remain hopeful that they will be able to get their hands on real-time data of all banking transactions.
As per SBP sources, as of 30th June 2019, there are 54.7 million bank accounts in the country. Out of which, 7.6 million are yet to be verified because of the lack of details about them.
Such a proportion of unverified accounts pose a serious threat to the economy of the country, said SBP sources.