Banks To Report Transactions Above Rs. 100 Million Under New Law

The government has introduced a new legal mechanism under which details of bank account holders with deposits or withdrawals exceeding Rs. 100 million within six months will be reported for digital cross-matching with tax records, effective from July 1.

The procedure has been laid down in the Finance Act 2026, issued on Monday, as part of efforts to detect under-reporting of sales, overstatement of expenses and non-reporting of taxable information.

Under the new framework, a Section 165AB titled Reporting of Financial Transaction Data by Banking Companies and Financial Institutions has been inserted into the Income Tax Ordinance, 2001.

According to the law, every banking company and Electronic Money Institution will be required to electronically upload specified financial transaction data to a Central Data Hub for algorithmic cross-matching of tax and banking information, notwithstanding the provisions of other banking and financial laws.

The information to be shared will include details of account holders whose deposits or withdrawals exceed Rs. 100 million during a reporting period in any or all of their bank accounts. The data will cover particulars of deposits and withdrawals, opening and closing balances, peak credits and total credits.

The reporting period will comprise two halves of a financial year: July 1 to December 31 and January 1 to June 30. The specified reporting dates will be January 31 and July 31, respectively.

The law says the shared information will be digitally processed and will not be accessible to income tax authorities during the cross-matching stage. If a significant mismatch is detected, the Board’s digital system will transfer the case to the Compliance Risk Management system for further proceedings through the National Faceless Centre.

The State Bank of Pakistan may also establish, operate and maintain a secure centralised virtual repository of banking data containing such information, records and financial transactions of persons maintained by scheduled banks on the basis of unique identifiers, as may be prescribed by the Board.

The Federal Board of Revenue has been made responsible for ensuring strict confidentiality of information received from banks and preventing any disclosure or misuse except as allowed under the law.

Under the law, the term “accounts” includes current, call, savings, fixed, term deposits and other forms of bank deposits, while “peak credits” refers to the highest credit balance across all accounts of an account holder during the reporting period.

The Central Data Hub will be maintained by the Board through PRAL, while the Compliance Risk Management system will be used to identify and communicate compliance risks linked to concealed sales, inflated expenses and unreported transactions.