The federal government has introduced a new financial reporting framework aimed at strengthening tax compliance and curbing tax evasion. Under the Finance Act 2026, banks and financial institutions across Pakistan are now required to report the financial data of account holders whose total deposits or withdrawals exceed Rs. 100 million (10 crore) over a six-month period.
The new law came into effect on July 1, 2026, through the addition of Section 165AB to the Income Tax Ordinance, 2001. It requires all banking companies to electronically submit specified transaction data to a centralized digital data hub, where it will be compared with taxpayers’ declared financial information using automated computer algorithms.
According to the new rules, banks must report details of customers whose cumulative transactions across one or multiple accounts reach or exceed Rs. 100 million within six months. The information shared will include total deposits, withdrawals, opening and closing balances, peak credit (the highest balance during the reporting period), and total credits.
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The reporting will take place twice each financial year. Data for the period July 1 to December 31 must be submitted by January 31, while data for January 1 to June 30 must be filed by July 31. The requirement applies to all major account types, including current, savings, fixed deposit, and term deposit accounts.
Authorities say the entire process will be fully digital, with transaction data initially processed through an automated system rather than being directly accessible to tax officials. If the system detects significant discrepancies between a taxpayer’s declared income and banking activity, the case will be referred to the National Faceless Center through the Compliance Risk Management System for further review and possible legal action.
The government says the initiative is designed to improve transparency, reduce tax evasion, and ensure fair enforcement while minimizing the risk of unnecessary human interference in the screening process.
