FBR to share tax return data with banks under new law
The Federal Board of Revenue (FBR) will now share income tax return data with banks as part of the newly introduced Tax Laws (Amendment) Bill 2024. This initiative aims to enhance the scrutiny of financial transactions by comparing banking information with tax data.
The bill, presented to the National Assembly, establishes classifications for “eligible” and “ineligible” persons, imposing restrictions on economic activities for those deemed ineligible, including non-filers. Ineligible individuals will face limitations on purchasing motor vehicles, buying or selling real estate, engaging in securities transactions, and will be prohibited from opening new bank accounts or accessing existing ones.
Under the new provisions, the FBR is allowed to exchange banking and tax information regarding high-risk individuals with financial institutions. The FBR can share details such as income, turnover, and bank account numbers declared in tax returns, as well as wealth and financial statements.
Banks are required to report discrepancies between banking data and the algorithms provided by the FBR, which includes identifying account holders who do not meet the eligibility criteria.
An “eligible person” is defined as someone who has filed an income tax return for the previous year and possesses sufficient resources as per their wealth or financial statements. Conversely, an “ineligible person” is anyone who does not meet these criteria.
The Commissioner Inland Revenue will have the authority to direct banks to restrict account operations for individuals who fail to register with the sales tax department. Additionally, property registration authorities will be instructed to prevent the transfer of property for those not registered for sales tax.
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The bill enforces restrictions on various economic transactions, including prohibiting ineligible persons from applying for vehicle registration or real estate transfers exceeding specified values. Banks will also be barred from opening or maintaining accounts for ineligible individuals, except for certain basic accounts.
Furthermore, cash withdrawals from bank accounts will be limited based on criteria set by the FBR. However, exceptions will be made for the purchase of certain vehicles, such as motorcycles and tractors, as well as other specified vehicles.
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