Banks agree to disclose accountholders’ information with FBR

KARACHI: Banks agreed to share information of accountholders, making cash and non-cash transactions with the tax authorities, sources said on Wednesday.

The sources said under an agreement banks will provide details of persons with specific transactions to the Federal Board of Revenue (FBR). 

The sources, however, did not disclose the transacted fund from an account that has to be shared with the FBR, but previously the tax authority proposed the transaction amount between one million to five million rupees on an annual basis.

They said the agreement was reached after several meetings of Pakistan Bankers Association (PBA) and the FBR and the terms of the accord would soon be unveiled.

Earlier, Masood Ali Naqvi, chairman of the Tax Reforms Commission (TRC) also confirmed that PBA and the FBR were in talks on the issue and the commission has already received a draft to give its opinion. The FBR, previously, issued several notices to the banks for sharing details of accountholders whose withholding tax is deducted by the banks. 

However, banks refused to provide such information, pleading legal limitations regarding the disclosure.

The PBA, in its budget proposals for the next fiscal, said the issue under Section 165 and Section 165A of Income Tax Ordinance, 2001 is related to the access to the customer information. Under the law, banks are required to disclose customer’s information to the FBR through online means.

The banks, however, demanded the FBR to remove such provision of accessing banks’ data, saying that another provision ‘Section 176’ has already allowed the FBR to obtain information about suspected persons in case of any tax evasion.

At present, banks are deducting 0.4 percent withholding tax on cash transaction of Rs50,000 and above by non-filers under Section 236P.

The purpose of introducing the section was broadening the tax base but banks were repeatedly refused on the basis of Banking Companies Ordinance, 1962 and Economic Reform Act, 1992 relating to customers confidentiality.

The sources said the FBR would conduct comprehensive data check in case the bank refuses or conceals information of deducted withholding tax.