Pakistan Introduces New Bank Transaction Reporting Rules from July 1 Under New Finance Act 2026

Starting July 1, 2026, the Government of Pakistan has introduced new bank transaction reporting rules under the Finance Act 2026 aimed at improving tax compliance through digital monitoring of high-value financial transactions. The new law requires banks and financial institutions to report the details of customers whose banking transactions exceed Rs100 million within a six-month period.

The measure has been introduced through a new provision, Section 165AB, added to the Income Tax Ordinance, 2001. The section, titled “Reporting of Financial Transaction Data by Banking Companies and Financial Institutions,” establishes a digital framework for sharing financial information with tax authorities while maintaining strict confidentiality.

Pakistan Introduces New Bank Transaction Reporting Rules from July 1 Under New Finance Act 2026

Under the new rules, all banking companies must electronically upload the financial data of qualifying account holders to a centralized digital data hub. This requirement applies regardless of any conflicting provisions in other banking or financial laws. The objective is to enable automated comparison of banking information with tax records using computer algorithms, helping authorities identify potential tax discrepancies without manual intervention.

The reporting requirement applies to customers whose total deposits or withdrawals across one or multiple bank accounts reach Rs100 million or more during any six-month reporting period. It covers all types of bank accounts, including current accounts, savings accounts, fixed deposits, and term deposit accounts.

Banks will be required to submit detailed financial information for eligible customers. The data will include total cash deposits and withdrawals, opening and closing account balances, peak credit—the highest balance maintained during the reporting period—and total credits received in the account. This information will allow the system to build a clearer financial profile of account holders while supporting automated tax compliance checks.

The law divides the reporting process into two six-month periods each financial year. Data for transactions between July 1 and December 31 must be submitted by January 31, while information covering January 1 to June 30 must be reported by July 31.

According to the Finance Act, the entire process will remain fully digital. During the initial cross-matching stage, the banking data will not be directly accessible to income tax officials. Instead, automated software will compare financial records with declared tax information. This safeguard has been introduced to minimize the risk of misuse of sensitive financial information and prevent harassment or undue interference with taxpayers.

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If the automated system detects a significant difference between a person’s declared income and banking transactions, the case will be forwarded through the Federal Board of Revenue’s Compliance Risk Management System to the National Faceless Center for further legal review and possible action. The faceless system is designed to reduce direct interaction between taxpayers and tax officials while promoting greater transparency.

The law also authorizes the State Bank of Pakistan to establish a secure, centralized virtual database for storing financial transaction records maintained by scheduled banks. The database is intended to strengthen data security while supporting digital tax administration.

At the same time, the Federal Board of Revenue (FBR) has been legally obligated to ensure strict confidentiality of all banking information received under the new reporting framework. The law prohibits unauthorized disclosure or misuse of customer data and requires authorities to use the information only for purposes permitted under the law.

The new reporting regime marks a significant step toward digital tax enforcement in Pakistan. By relying on automated systems and secure data management, the government aims to improve tax compliance, increase transparency, and strengthen confidence in the country’s financial and taxation systems while protecting the privacy of legitimate account holders.