Islamabad – In a significant policy shift aimed at curbing undocumented wealth, the Federal Board of Revenue (FBR) has rolled out new restrictions that will prevent individuals who haven’t declared their income sources from buying expensive assets such as luxury cars and high-end property.
The FBR outlined these new measures in Income Tax Circular No. 1 of 2025, released Monday, which elaborates on changes introduced under the Finance Act 2025.
Who’s Now Considered “Ineligible”?
At the heart of this policy is Section 114C, a newly added provision that introduces a clear divide between “eligible” and “ineligible” persons when it comes to major economic transactions.
An eligible person is someone who can prove — via their wealth statement or financial/investment documentation — that they have the legitimate financial capacity to afford big-ticket purchases. This includes declared cash assets, foreign currency, gold, stocks, bonds, or receivables that amount to at least 130% of the transaction’s value.
Also accepted as proof: previously declared assets being used in a swap or trade, provided the value matches that recorded in formal agreements. For individuals, immediate family — parents, spouses, and dependent children — also fall under the same eligibility status.
Those unable to meet these documentation requirements will be classified as ineligible and barred from specific high-value economic activities.
What Ineligible Persons Can’t Do Anymore
The new rules place clear bans on the following transactions for ineligible individuals:
- Buying vehicles worth over Rs. 7 million.
- Acquiring or transferring real estate valued above Rs. 100 million.
- Investing over Rs. 50 million in securities, mutual funds, or similar instruments — unless the investment is fresh and not recycled from previous gains or liquidations.
- Withdrawing more than Rs. 100 million in cash from bank accounts.
Not Just About Tax, But Transparency
While the FBR emphasizes that the newly introduced documentation (like the source of expenditure statement) won’t automatically trigger tax assessments under Section 111 (which deals with unexplained income), the broader aim is clear: push individuals to formally declare income and assets if they want to participate in Pakistan’s high-value economy.
Who’s Exempt?
Non-resident individuals and public companies are largely excluded from these restrictions — except when it comes to the Rs. 100 million cash withdrawal limit, which applies universally.
The FBR clarified that these changes won’t take effect immediately. A formal implementation date will be announced through a notification published in the official Gazette.