The Finance Act, 2026 has introduced Section 165AB, requiring banks and Electronic Money Institutions to electronically upload prescribed information to a Central Data Hub where an account holder’s deposits or withdrawals exceed Rs. 100 million during a reporting period.
The information will be subjected to algorithmic cross-matching against tax data. Significantly, the circular states that the information will not be visible to income tax authorities during the cross-matching process. Only where the system identifies a “gross mismatch” will the case be fed into FBR’s Compliance Risk Management system for possible further proceedings through the National Faceless Centre.
This represents a noticeable shift from traditional information gathering towards automated, risk-based tax enforcement. For taxpayers with substantial banking activity, consistency between declared income, turnover, assets, business transactions and banking flows will therefore become increasingly important, as significant mismatches may now be identified without the need for an officer to manually review the underlying banking data.