New automated monitoring system will compare major financial transactions with taxpayers’ declared income and banking records
ISLAMABAD: The Federal Board of Revenue (FBR) has made it mandatory for banks and electronic money institutions to report financial transactions exceeding Rs10 million to its central data hub under the Finance Act 2026.
The new requirement will provide the tax authority with financial information relating to account holders who conduct transactions above the prescribed threshold. Consequently, the FBR will use its digital systems to compare the information with taxpayers’ declared income, tax profiles and relevant banking records.
Officials expect the mechanism to strengthen monitoring of significant financial activity and help authorities identify possible inconsistencies between a taxpayer’s declared financial position and actual transactions.
Automated System to Identify Financial Discrepancies
Under the new framework, banks and electronic money institutions must transmit information concerning qualifying transactions to the FBR’s centralised database.
The system will then automatically match transaction data against information already available in tax and banking records. Therefore, substantial differences between declared income and financial activity could attract additional scrutiny from tax authorities.
However, a transaction exceeding Rs10 million would not by itself establish a tax violation. Instead, the information would provide the FBR with another data point for identifying cases that may require examination or further action.
The reporting requirement expands the government’s reliance on technology to improve tax administration and detect potentially undeclared financial activity.
Government Expands Digital Tax Monitoring
Meanwhile, the measure forms part of broader efforts to digitise Pakistan’s tax system and increase the FBR’s access to financial information.
Authorities have increasingly turned toward automated data matching to identify discrepancies without relying exclusively on conventional audits and manually collected records.
Furthermore, greater integration between financial institutions and the FBR could allow tax officials to identify unusual transactions more quickly and compare them with taxpayers’ declared resources.
The government expects such digital monitoring to improve compliance, broaden the documented economy and strengthen accountability across Pakistan’s financial system.
Banks and electronic money institutions will now have to ensure that transactions crossing the Rs10 million reporting threshold are communicated to the FBR in accordance with requirements introduced through the Finance Act 2026.
