Section 114C of the Income Tax Ordinance, 2001: Restricted Transactions

Quick Answer

As matters stand, there is no general tax amnesty scheme in force in Pakistan. The Government has publicly stated that no general amnesty is under consideration, and the Federal Board of Revenue has denied that any amnesty for undeclared assets or smuggled vehicles is being introduced [VERIFY]. What exists instead is a narrower compliance framework introduced by the Finance Act, 2025: Section 114C of the Income Tax Ordinance, 2001 [VERIFY], titled “Restriction on economic transactions by certain persons.” The provision divides taxpayers into “eligible persons” and “ineligible persons”, and restricts certain high-value economic transactions by persons who cannot demonstrate declared resources [VERIFY]. It is not an amnesty in the traditional sense: it offers no immunity for past non-disclosure and no fixed tax rate on hidden wealth. The section is subject to commencement on a date to be notified by the Federal Government in the Official Gazette; whether that notification has issued should be confirmed with the Federal Board of Revenue before any transaction is undertaken [VERIFY].

What the Law Says

The framework rests on the Income Tax Ordinance, 2001 and the amendments made to it by the Finance Act, 2025 [VERIFY].

Section 114C of the Income Tax Ordinance, 2001. Section 114C was inserted by the Finance Act, 2025 [VERIFY]. It restricts certain categories of high-value economic transaction by “ineligible persons” — that is, persons who cannot demonstrate sufficient declared resources. The provision operates by reference to a schedule that fixes the transaction categories and the monetary thresholds at which each restriction begins [VERIFY].

The Fifteenth Schedule. The Fifteenth Schedule to the Income Tax Ordinance, 2001, inserted by the Finance Act, 2025, sets out the monetary thresholds for each restricted transaction category [VERIFY]. The current thresholds are published by the Federal Board of Revenue and should be read from the schedule, not from secondary sources, because they may be amended by each Finance Act.

Section 111 of the Income Tax Ordinance, 2001. Section 111 deals with unexplained income and assets. The protective effect of a declaration made under Section 114C is defined by reference to Section 111: resources declared in a statement of source of investment and expenditure do not, to the extent provided, constitute the nature or source of income for the purposes of Section 111 [VERIFY]. This is a limited protection, not an immunity from tax on the underlying acquisition.

Federal Board of Revenue Circular No. 1 of 2025-26. The Federal Board of Revenue has issued a circular explaining the operation of Section 114C [VERIFY]. The circular should be read alongside the schedule and the current text of the Ordinance. It does not have the force of law; it records the Board’s interpretation.

Commencement. Section 114C provides that the restrictions come into force on a date to be notified by the Federal Government in the Official Gazette [VERIFY]. Whether that notification has issued should be confirmed with the Federal Board of Revenue or through the current Official Gazette before a taxpayer relies on, or seeks to avoid, the provision.

What the Law Does and Does Not Do

The law does:

• Create a distinction between “eligible persons” and “ineligible persons” for the purposes of certain high-value transactions [VERIFY].
• Define eligibility by reference to declared resources in the wealth statement, the financial statement, or a statement of source of investment and expenditure [VERIFY].
• Restrict certain categories of high-value transaction by ineligible persons, subject to the thresholds in the Fifteenth Schedule [VERIFY].
• Provide, to the extent defined, that resources declared in a source-of-investment-and-expenditure statement will not be treated as unexplained income under Section 111 [VERIFY].
• Come into force on a date to be notified by the Federal Government in the Official Gazette [VERIFY].

The law does not:

• Offer immunity from tax, penalty, or prosecution for past non-disclosure.
• Impose a fixed tax rate on previously undeclared assets.
• Create a declaration window during which undisclosed assets can be regularised on concessional terms.
• Regularise undeclared wealth generally. It is directed at the resources used in a specific high-value transaction, not at the whole of a taxpayer’s asset position.
• Replace the ordinary assessment process or the ordinary anti-avoidance framework of the Ordinance.

Who This Applies To

This article applies to individuals and businesses in Pakistan who are contemplating a high-value economic transaction — the booking, purchase, or registration of a motor vehicle; the registration or transfer of immovable property; investment in securities, debt securities, units of mutual funds, or money-market instruments; or a large annual cash withdrawal from bank accounts [VERIFY]. It also applies to non-filers and late filers who may be treated as ineligible persons, and to non-residents and public companies to the limited extent the restrictions apply to them [VERIFY]. It does not apply to persons or transactions below the thresholds fixed by the Fifteenth Schedule, or to those outside the categories of transaction the section lists [VERIFY].

Procedure (step by step)

1. Identify the transaction. Confirm whether it falls within one of the categories of restricted economic transaction under Section 114C [VERIFY].
2. Check the current thresholds. The thresholds are fixed in the Fifteenth Schedule and are published by the Federal Board of Revenue; they should be read from the current schedule, not from a secondary source [VERIFY].
3. Confirm the commencement position. Establish whether Section 114C has been notified for commencement in the Official Gazette [VERIFY]. If no notification has issued, the restrictions are not being enforced; confirm this with the Board or with counsel.
4. File your income tax return and wealth statement, if not already filed. A filed return with a wealth statement showing declared assets is the starting point for eligibility [VERIFY].
5. Test eligibility against the resource requirement. Confirm whether the declared resources meet the test fixed by the section, read with the Board’s circular [VERIFY].
6. If the wealth statement for the latest tax year does not show sufficient resources, prepare a statement of source of investment and expenditure for the year of the transaction, showing the resources relied on [VERIFY].
7. Review the interaction between the declaration and the taxpayer’s overall position. The protection under Section 111 is limited; the declaration should be prepared consistently with the rest of the taxpayer’s filings.
8. Maintain the record. Retain copies of the return, the wealth statement, the source-of-investment-and-expenditure statement, the transaction agreement, and any correspondence with the Federal Board of Revenue.
9. Confirm the current position before completing the transaction. The commencement position, the thresholds, and the Board’s interpretation are all subject to change [VERIFY].

Documents Required

• Income tax return for the latest tax year, with the wealth statement [VERIFY].
• Financial statement for the tax year immediately preceding the year of the transaction, where relevant [VERIFY].
• Statement of source of investment and expenditure for the year of the transaction, where the previous wealth statement does not show sufficient resources [VERIFY].
• Evidence of the resources declared — bank statements, certificates of investment, valuations of gold or securities, or other supporting records.
• The transaction agreement, invoice, or draft instrument.
• National Tax Number and CNIC of the taxpayer and, where relevant, of the immediate family members whose resources are being relied on [VERIFY].
• Any correspondence with the Federal Board of Revenue on the transaction or on the filing.
• A copy of the current Fifteenth Schedule and the Board’s circular, retained as at the date of filing [VERIFY].

Common Mistakes

1. Assuming a general amnesty is open. No general amnesty is in force. Any offer to “register” undeclared assets under a 2025 amnesty should be independently verified against the current text of the Ordinance and the Finance Act [VERIFY].
2. Treating Section 114C as an immunity. Section 114C protects certain declared resources from being treated as unexplained income under Section 111. It does not grant immunity for past non-disclosure or for other tax offences [VERIFY].
3. Relying on secondary sources for thresholds. The thresholds are fixed by the Fifteenth Schedule and may be amended by each Finance Act. They should be read from the current schedule, not from an article or a summary.
4. Assuming the section is in force. The section is subject to commencement on a date to be notified in the Official Gazette. Enforcement by banks, registration authorities, and property registrars depends on the notification [VERIFY].
5. Filing a source-of-investment-and-expenditure statement without reviewing the wider position. The declaration is not a clean slate. It documents the resources used in the transaction; other assets and sources remain subject to the ordinary framework.
6. Overlooking the categories of transaction. The restriction applies to specific categories of transaction. Whether a given transaction falls within one of them should be confirmed before proceeding [VERIFY].
7. Not keeping the filing trail. The return, the wealth statement, the source-of-investment statement, and the transaction documents should all be retained, together with a note of the date on which each was filed.

Practical Checklist

• Transaction category checked against Section 114C [VERIFY].
• Current thresholds read from the Fifteenth Schedule [VERIFY].
• Commencement position confirmed with the Federal Board of Revenue or the Official Gazette [VERIFY].
• Income tax return and wealth statement filed for the latest tax year.
• Resource position tested against the section’s requirement.
• Source-of-investment-and-expenditure statement prepared, where needed.
• Interaction with the taxpayer’s wider filings reviewed.
• Filing trail and transaction documents retained.
• Current position confirmed again immediately before the transaction.

Frequently Asked Questions

Is there a tax amnesty scheme in Pakistan?
No general tax amnesty scheme is in force. The Government has publicly stated that no general amnesty is under consideration, and the Federal Board of Revenue has denied that an amnesty for undeclared assets is being introduced [VERIFY]. Section 114C of the Income Tax Ordinance, 2001 is a compliance provision, not an amnesty scheme.

What is Section 114C of the Income Tax Ordinance, 2001?
Section 114C restricts certain categories of high-value economic transaction by “ineligible persons” — persons who cannot demonstrate sufficient declared resources. It was inserted by the Finance Act, 2025 and operates by reference to the Fifteenth Schedule, which fixes the monetary thresholds for each restricted transaction [VERIFY].

Who is an ineligible person under Section 114C?
A person who has not declared sufficient resources in the wealth statement, financial statement, or a statement of source of investment and expenditure, as required by the section [VERIFY]. Non-filers and late filers will typically fall within the definition, as will persons whose declared wealth does not support the transaction in question.

What categories of transaction are restricted by Section 114C?
The section restricts the booking, purchase, or registration of a motor vehicle; the registration, recording, or attestation of transfer of immovable property; investment in securities, debt securities, units of mutual funds, or money-market instruments; and annual cash withdrawals from bank accounts, in each case above the threshold fixed by the Fifteenth Schedule [VERIFY]. The thresholds themselves should be read from the current schedule.

What does “sufficient resources” mean under Section 114C?
The test is defined by reference to cash and cash-equivalent assets measured against the value of the intended transaction, at the ratio fixed by the section and the schedule [VERIFY]. Cash and cash equivalents include local and foreign currency, the value of gold, the net realisable value of stocks, bonds, and receivables, and any other prescribed cash-equivalent asset. The current ratio should be read from the Ordinance and the Board’s circular.

Is Section 114C currently being enforced?
Section 114C comes into force on a date to be notified by the Federal Government in the Official Gazette [VERIFY]. Whether that notification has issued should be confirmed with the Federal Board of Revenue before a taxpayer relies on, or seeks to avoid, the provision. Reporting indicates that preparatory work on the enforcement mechanism has been in progress; the current position should be confirmed directly.

Does Section 114C give immunity for undeclared assets?
No. It provides, to the extent defined, that resources declared in a source-of-investment-and-expenditure statement will not be treated as unexplained income under Section 111 [VERIFY]. It does not grant immunity for past non-disclosure or for other tax offences.

Does Section 114C apply to non-residents and public companies?
The restrictions do not, in general, apply to non-resident persons or public companies, except in respect of cash withdrawals [VERIFY]. The current position should be confirmed against the section and the Board’s circular.

Can I buy a car or property if I am a non-filer?
If Section 114C has been notified for commencement and you are treated as an ineligible person, the restricted transaction cannot be completed until eligibility is established [VERIFY]. Until the provision is notified, the restrictions are not being enforced. The position should be confirmed with the Federal Board of Revenue before a transaction is undertaken.

What is the Fifteenth Schedule?
The Fifteenth Schedule is the schedule to the Income Tax Ordinance, 2001 inserted by the Finance Act, 2025, which sets out the categories of restricted transaction and the monetary thresholds applicable to each [VERIFY]. The current version of the Schedule should be read before relying on any threshold.

Is a declaration under Section 114C confidential?
The declaration is a filing under the Income Tax Ordinance, 2001 and is subject to the confidentiality and disclosure provisions applicable to tax records [VERIFY]. The scope of protection should be confirmed against the Ordinance and the Board’s practice.

Where can I read the current text of Section 114C and the Fifteenth Schedule?
From the current text of the Income Tax Ordinance, 2001 as amended by the Finance Act, 2025, available through the Pakistan Code and the Federal Board of Revenue’s published materials [VERIFY]. The Board’s Circular No. 1 of 2025-26 explains the Board’s interpretation and should be read alongside the Ordinance.

Official Fees and Where to Check Them

This article quotes no fee figure and no threshold. Schedules change, and an outdated figure is worse than no figure. The monetary thresholds for each category of restricted transaction under Section 114C are fixed in the Fifteenth Schedule to the Income Tax Ordinance, 2001 and are amended from time to time by Finance Acts [VERIFY]. The current thresholds should be read from the current text of the Ordinance and the Fifteenth Schedule, or from the Federal Board of Revenue’s published schedule, before any transaction is undertaken. Where a court fee, stamp duty, or registration fee is relevant to the transaction, the current schedule is published by the authority that administers it — the relevant court’s fee counter or the provincial government’s published schedule for court fees, and the Sub-Registrar for stamp duty and registration [VERIFY]. Professional fees are a matter of private agreement between the client and the practitioner.

Related Reading

• Articles hub — https://paklegaldesk.com/articles/ [VERIFY]
• Unexplained income and assets under Section 111 of the Income Tax Ordinance, 2001 [VERIFY]
• Filing an income tax return and wealth statement in Pakistan [VERIFY]
• FBR notices and the taxpayer’s response [VERIFY]
• The Pakistan Code — using the official database for statutory research [VERIFY]

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What You Can Do Next

• Use the platform’s Legal Research tool to locate the current text of the Income Tax Ordinance, 2001, the Fifteenth Schedule, and the Federal Board of Revenue’s Circular No. 1 of 2025-26.
• Use the platform’s document drafting tools to prepare a source-of-investment-and-expenditure statement and a covering note listing the resources relied on.
• Use the platform’s case management tools to log filing dates, correspondence with the Federal Board of Revenue, and the transaction documents.
• Use the platform’s document drafting tools to prepare a schedule of documents supporting the declared resources.

Legal Information Disclaimer

This article provides general information about Section 114C of the Income Tax Ordinance, 2001 and does not constitute legal or tax advice. Statutes, schedules, circulars, and commencement positions change. Verify every provision, threshold, and figure with the Federal Board of Revenue or a qualified legal professional before any transaction is undertaken. Reading this article does not create an advocate-client relationship.