Bank Reconciliation · PakistanYour bank statement shows tax, charges and currency conversions your books may not. We reconcile all of it.
We reconcile each bank and payment account to your books, record the tax and charges banks deduct, account for foreign currency receipts properly, and clear the backlog if months have been missed.
Accounting
At a glance
- Authorities
- Federal Board of Revenue (FBR)
- Forms & references
- Sales tax return (Annex-A)Bank withholding tax certificates
- Accounts covered
- Rupee and foreign currency bank accounts, cards and payment platforms
- Tax items
- Bank withholding, deductions on export proceeds, section 73 payments
- Software
- QuickBooks, Xero, Zoho Books or your ERP
- Format
- Monthly, or a one-off catch-up before audit or tax filing
Overview
What it is, and why it matters.
A bank reconciliation proves that your cash book and your bank statement agree, and explains every difference: cheques issued but not yet presented, deposits in transit, bank charges, and entries that were never recorded.
In Pakistan the bank statement also carries tax. Banks deduct withholding tax on profit on deposits and, for exporters, often on export proceeds, and those deductions need recording and supporting with certificates so they are treated correctly in your income tax return. Receipts from US or UK clients are converted at the bank’s rate, leaving differences between invoice and receipt to account for.
Reconciliation also supports sales tax. Under section 73 of the Sales Tax Act 1990, input tax on purchases above Rs 50,000 from one supplier in a tax period is only admissible if paid through the banking channel from your declared business account. Matching supplier payments to bank entries each month keeps those claims defensible.
Who needs it
Who typically needs it.
- 01
IT exporters and software houses
Businesses paid in dollars or pounds by foreign clients, directly or through platforms such as Payoneer, where receipts arrive net of charges and at varying rates.
- 02
Sales tax registered businesses
Manufacturers and distributors who need supplier payments matched to bank entries to support their input tax claims.
- 03
Companies preparing for audit
Companies whose auditors will ask for bank reconciliations and confirmations at the year end.
- 04
Businesses banking with several banks
Firms with accounts and running finance facilities at more than one bank, and frequent transfers between them.
When you need it
The moments that usually trigger it.
- Your auditor has asked for year-end bank reconciliations and you don’t have them.
- Your cash book and bank balance haven’t matched for months.
- Export receipts were recorded at invoice value rather than the amount the bank credited.
- Withholding tax deducted by your bank hasn’t been recorded or claimed.
- An FBR notice questions input tax on purchases that were paid in cash.
- You’ve moved to accounting software and need to bring past months up to date.
Scope
Exactly what we handle.
Our engagement letter lists these specifically, so you know what is included before any work begins.
- 01
Monthly reconciliation of each rupee and foreign currency account to bank statements.
- 02
Recording bank charges, markup on finance facilities, and profit on deposits with the tax deducted from it.
- 03
Foreign currency receipts recorded at the rate applied, with exchange gains and losses posted.
- 04
A register of tax deducted by banks, with the certificates needed for your return.
- 05
Matching supplier payments to bank entries to support section 73 compliance for input tax.
- 06
Clearing old unpresented cheques, stale entries and suspense balances, with documented explanations.
- 07
Catch-up reconciliations for past months or years before audit or tax filing.
The process
How it runs, step by step.
Timings depend on the authority and on how quickly documents come together. We tell you what’s typical for your case at the start.
Start with a conversationGather statements
We collect statements for every bank account, including foreign currency accounts and any payment platform the business uses.
Fix the starting point
We agree the opening balance with your last audited accounts or a confirmed statement date.
Match receipts and payments
We match receipts and payments, and trace differences to unpresented cheques, deposits in transit, bank deductions, exchange differences or missing entries.
Correct and record
We post corrections and record tax deducted by banks, referenced to the certificates.
Report
You receive a reconciliation statement for each account and month, with open items listed, in the form auditors usually expect.
What we’ll need
The information to have ready.
A typical checklist. After the first conversation we send a version specific to your situation, so you don’t gather anything you don’t need.
Bank records
- Statements for every rupee and foreign currency account
- Cheque book counterfoils or payment registers
- Loan and running finance statements
Tax and export documents
- Withholding tax certificates issued by banks
- Proceeds realisation certificates or credit advices for export receipts
- Statements from payment platforms such as Payoneer
Books
- Access to your accounting software or cash book
- Last audited accounts
Please don’t email passports or bank statements. Once we’ve spoken, you’ll get access to a secure upload.
Common mistakes
Where this usually goes wrong.
The problems we are most often asked to fix, and what they tend to cost.
- Mistake 01
Recording export receipts at invoice value
A $5,000 invoice may arrive as less after intermediary charges, and at a different rate from the one you expected. Booking the invoice amount leaves an unexplained difference in the bank and misstates revenue and exchange gains.
- Mistake 02
Ignoring tax deducted by the bank
Tax deducted on profit on deposits or on export proceeds appears on the statement but often not in the books. Without it the balance won’t reconcile, and the deduction may not be reflected correctly in your return.
- Mistake 03
Letting stale cheques sit indefinitely
Cheques issued but never presented keep the book balance lower than the bank balance. They should be reviewed and reversed or reissued after a reasonable time.
- Mistake 04
Paying suppliers from personal accounts
Section 73 requires payment from the business bank account declared for sales tax for input tax to be admissible. Paying from a director’s personal account can cost you the claim.
Worth knowing
The limits, stated upfront.
We reconcile to the statements and records you provide; missing statements limit what can be confirmed.
Bank confirmations for audit are requested by your auditor directly from the bank.
Reconciliation is not a forensic investigation, though we will report anything unusual we find.
Whether a particular deduction is adjustable, minimum or final tax depends on the income and the law for that year; we confirm this when your return is prepared.
Questions
Bank Reconciliation: frequently asked.
If yours isn’t here, ask us directly. We’ll answer in plain terms.
Ask a questionWhy doesn’t my bank balance match my books?
Usually because of timing items, such as cheques not yet presented or deposits not yet cleared, or because the bank has made deductions your books don’t show, such as charges, markup and withholding tax. A reconciliation lists each difference so you can see which is which.
How should export receipts in dollars be recorded?
At the rupee amount the bank actually credited, with the difference from the invoice recorded as an exchange gain or loss or as a bank charge. Keep the bank’s credit advice or proceeds realisation certificate with each receipt.
Can you reconcile Payoneer or other payment platform accounts?
Yes. We treat each one as a separate account, record fees and conversions, and match withdrawals to your Pakistani bank.
What does section 73 of the Sales Tax Act have to do with bank reconciliation?
Input tax on purchases above Rs 50,000 from one supplier in a tax period is only admissible if paid through the banking channel from your declared business account. Matching supplier payments to the bank each month shows the condition is met.
Our auditor needs reconciliations for the last three years. Can you help?
Yes. Catch-up work starts from the last audited balance and moves forward month by month. We agree the scope and the priority accounts with you before starting.
Related
Often needed alongside this.
The equivalent in our other countries
Speak with a consultant
Talk to us about bank Reconciliation.
Pick the closest match and we’ll take it from there. You’ll get a written scope and fee before any work begins.
Or use our three-step guide, or email hello@fiscorra.com