SBP to Get Access to Centralised Bank Data Under New Tax Amendment

The State Bank of Pakistan (SBP) will be able to establish and operate a centralised system for banking data under a recent amendment to the Income Tax Ordinance, 2001.

The amendment introduces a new Section 165AB, allowing the central bank to maintain a secure digital repository containing banking information, records, and financial transactions held by scheduled banks.

SBP to Get Access to Centralised Bank Data Under New Tax Amendment

The move aims to improve the process of matching banking and tax information while maintaining safeguards around the confidentiality of financial data.

Banks to Report Accounts With Transactions Above Rs100 Million

Under the new provision, banks and electronic money institutions (EMIs) will have to electronically submit prescribed information about account holders whose deposits or withdrawals exceed Rs100 million during a reporting period.

The information will be sent to a central data hub established for this purpose. The system will then use algorithms to cross-check banking information against tax records.

This means transactions above the Rs100 million threshold could come under greater scrutiny when the banking data does not match the information available in tax records.

Tax Authorities Will Not Directly See the Data

The amendment also sets limits on how the information will be accessed during the initial cross-matching process.

According to the provision, the digitally processed information will not be visible to income tax authorities while the system performs the initial comparison.

Only cases involving a significant mismatch between banking and tax information will move to the Federal Board of Revenue’s (FBR) Compliance Risk Management (CRM) system.

The National Faceless Centre can then take further action on these cases.

New Data System to Include Confidentiality Safeguards

The amendment also defines several terms related to the new system, including reporting period, specified date, accounts, peak credits, central data hub, and compliance risk management.

It also includes confidentiality safeguards for the information collected through the system.

The framework will allow automated comparison of financial and tax information without giving tax officials direct access to all banking records during the initial screening stage.

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What the Change Means

The new system could strengthen the government’s ability to identify major differences between reported income and banking activity.

Account holders with deposits or withdrawals exceeding Rs100 million during a reporting period will fall within the reporting framework. However, the system will refer only cases with significant mismatches for further action.

The measure therefore focuses on automated risk identification rather than automatically opening tax proceedings against every account covered by the Rs100 million threshold.

The new arrangement gives the SBP a central role in handling the banking data hub while establishing a process through which significant mismatches can reach the FBR’s compliance system.