ISLAMABAD 5 August: The Federal Board of Revenue (FBR) has announced that individuals who fail to disclose their sources of income or investments will be classified as “ineligible persons” and barred from conducting major economic transactions, under new rules introduced via the Finance Act 2025.
In its latest income tax circular (1 of 2025), FBR explained the implementation of Section 114C, which aims to tighten oversight on high-value financial activities by linking them directly to declared wealth or verifiable sources of funds.
The new provision categorizes individuals as eligible or ineligible based on their ability to justify transactions through wealth statements, financial records, or statements of investment and expenditure.
Key Restrictions for Ineligible Persons:
- Purchase of vehicles with invoice value exceeding Rs. 7 million
- Acquisition or transfer of immovable property valued over Rs. 100 million
- Investment in securities or mutual funds exceeding Rs. 50 million, unless it’s a new investment
- Bank withdrawals over Rs. 100 million in any fiscal year
To qualify as an eligible person, an individual must have at least 130% of the transaction value in the form of declared cash or cash-equivalent assets—including local/foreign currency, gold, stocks, bonds, or receivables—in their latest filed tax documents.
Capital assets used in transactions, if already declared, will also be considered part of available resources based on their documented value.
The rule applies not only to individuals but also to their immediate family members—parents, spouse, and dependent children—if their transactions exceed the thresholds.
However, non-resident persons and public companies will be exempt from most provisions, except in cases involving large cash withdrawals.
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The implementation date for Section 114C will be officially notified by the federal government through a Gazette notification.
FBR clarified that merely declaring resources in an expenditure statement will not be considered proof of legal income under Section 111 (related to unexplained income/assets), ensuring that tax evasion loopholes remain closed.
Tax experts believe this move could significantly curb undeclared wealth circulation and force greater documentation of Pakistan’s cash-heavy economy.
