FBR defends SMS alerts, assures no breach of taxpayer privacy

The Federal Board of Revenue (FBR) has assured the Senate Standing Committee on Finance that it has not breached the financial privacy of taxpayers by sending SMS alerts regarding their bank accounts and property transactions.

In a submission to the committee, the FBR explained that the recent messages sent to income tax return filers were part of an initiative to improve taxpayer awareness and compliance through targeted, behaviorally informed nudges. The messages, which contained information about the taxpayers’ financial profiles, were sent only to the individuals concerned and did not involve any third parties. The communications were transmitted through official, secure channels.

The FBR emphasised that its actions were fully aligned with the legal provisions under the Income Tax Ordinance, 2001, which empowers the Board to access third-party data from various institutions to enhance tax compliance and broaden the tax base. This includes access to banking data, as authorised under Section 165A, which allows banking companies to provide information about deposits, withdrawals, and payments exceeding specific thresholds.

Additionally, Section 175A of the ordinance grants the FBR real-time access to data from designated agencies, such as NADRA, FIA, the State Bank of Pakistan, provincial land authorities, and utility companies, all for tax purposes while maintaining confidentiality in accordance with Section 216.

The FBR assured that all taxpayer data is securely stored within its systems and used solely for risk-based analysis and taxpayer facilitation, adhering to strict data protection protocols. The Board also reiterated its commitment to ensuring the highest standards of data security, respecting taxpayers' rights, and promoting transparency.

The FBR confirmed that the recent SMS notifications do not violate financial privacy and are intended to enhance voluntary tax compliance by reminding individuals of their financial data. The Board also reaffirmed its cooperation with parliamentary oversight bodies to ensure full transparency and accountability in its operations.