The Federal Board of Revenue has introduced a new digital reporting requirement under which banks and Electronic Money Institutions will be required to electronically upload prescribed information about account holders whose deposits or withdrawals exceed Rs100 million during a reporting period. The information will be submitted to the Central Data Hub and used for algorithmic cross-matching between tax records and banking data. The measure forms part of amendments introduced through the Finance Act 2026 to the Income Tax Ordinance, 2001, with the FBR outlining the new requirements through Circular No. 02 of 2026-27.
According to the circular, a new Section 165AB has been inserted into the Income Tax Ordinance, establishing the obligation for every banking company and Electronic Money Institution to electronically provide the prescribed information to the Central Data Hub. The provision applies notwithstanding banking confidentiality laws and focuses on account holders whose deposits or withdrawals cross the Rs100 million threshold during the relevant reporting period. The data will be processed digitally for the purpose of cross-matching tax and banking information through an automated and algorithm-based system.
The FBR has stated that the information submitted by banks and Electronic Money Institutions will not be directly visible to any income tax authority while the automated cross-matching process is taking place. Instead, the system will digitally analyse the available information and identify significant differences or inconsistencies between an individual’s tax information and banking activity. Only cases involving what the FBR has described as a gross mismatch will move beyond the automated stage and be transferred to the Board’s Compliance Risk Management system for further action.
Under this process, cases identified through the digital cross-matching mechanism may be referred to the National Faceless Centre for further proceedings. The arrangement is designed to separate the initial analysis of banking and tax information from direct access by tax officials, allowing the Central Data Hub and associated systems to carry out the initial assessment electronically. The use of algorithmic cross-matching and the Compliance Risk Management system places greater emphasis on technology-based scrutiny and risk assessment in the FBR’s tax compliance framework.
The changes are linked to the Finance Act 2026, which introduced several amendments to the Income Tax Ordinance, 2001. Circular No. 02 of 2026-27 explains the important changes and provides clarification on the newly inserted Section 165AB. Under the provision, the electronic submission of information by banks and Electronic Money Institutions is specifically connected to deposits and withdrawals exceeding Rs100 million within a reporting period. The threshold is intended to identify high-value banking activity for comparison with the tax information available to the authorities.
The FBR has also provided definitions for several key terms used in the new framework, including “reporting period”, “specified date”, “accounts”, “peak credits”, “Central Data Hub” and “compliance risk management”. The circular further includes confidentiality safeguards governing the handling and processing of the information. The framework therefore combines mandatory electronic reporting by financial institutions with automated data processing, controlled access during the cross-matching stage and further proceedings only where the system identifies a gross mismatch requiring review.
The development adds another technology-driven layer to Pakistan’s tax administration and financial reporting structure, particularly for banks and Electronic Money Institutions operating within the country’s digital financial ecosystem. By directing relevant institutions to electronically upload prescribed information to a centralised data platform, the FBR is expanding the use of digital systems for cross-matching financial activity with tax records. The process will focus on transactions crossing the Rs100 million threshold while incorporating confidentiality provisions and a risk-based mechanism for identifying cases that may require further examination.
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