Banks to Report High-Value Transactions Under New Tax Reporting Law
The federal government has introduced a new tax reporting framework under the Finance Act 2026, requiring banks and certain financial institutions to report high-value financial transactions to support digital tax compliance.
The new provisions will take effect from July 1, 2026.
Reporting Threshold Set at Rs. 100 Million
Under the new law, banks and Electronic Money Institutions (EMIs) will be required to electronically submit information about account holders whose total deposits or withdrawals exceed Rs. 100 million during a six-month reporting period.
The reporting requirement applies across all eligible accounts held by an individual or entity.
The information to be submitted includes:
- Total deposits and withdrawals
- Opening and closing account balances
- Peak credit balance during the reporting period
- Total credits received
Digital Cross-Matching With Tax Records
The Finance Act introduces Section 165AB into the Income Tax Ordinance, 2001, establishing a digital system for comparing banking information with tax records.
According to the law, financial data will be processed through a Central Data Hub using automated systems to identify potential discrepancies between declared tax information and financial activity.
If the system detects a significant mismatch, the case may be referred to the Compliance Risk Management System for further review through the National Faceless Centre, in accordance with applicable tax laws.
Reporting Schedule
Banks will submit transaction data twice each financial year:
- July 1 to December 31 – Report due by January 31
- January 1 to June 30 – Report due by July 31
Confidentiality Measures
The law states that financial information submitted under the reporting framework will be subject to confidentiality requirements.
The Federal Board of Revenue (FBR) has been assigned responsibility for protecting the data and ensuring it is used only as permitted under the law.
The legislation also allows the State Bank of Pakistan (SBP) to establish and maintain a secure centralized repository for banking data, while the Central Data Hub will be managed through Pakistan Revenue Automation Limited (PRAL).
The government says the new reporting framework is intended to strengthen digital tax administration and improve the identification of potential compliance risks through automated data analysis.
