Islamabad, August 3, 2025 – The Federal Board of Revenue (FBR) has officially clarified that ineligible individuals may now benefit from a form of tax amnesty, allowing them to enter the documented economy without fear of questioning about the origins of their declared resources.
The clarification was issued through Income Tax Circular No. 1 of 2025-26, which outlines key amendments to the Income Tax Ordinance, 2001, made via the Finance Act, 2025. While the FBR avoided directly using the term “amnesty,” the policy has the same practical effect. The FBR stated that “sufficient resources” declared in the statement of source of expenditure shall not be treated as undeclared income under Section 111 — the section dealing with unexplained income and assets.
Through the introduction of Section 114C, the FBR has defined two categories of taxpayers: eligible and ineligible persons. Eligibility is determined based on whether a person has declared sufficient financial resources in their wealth statement, financial statement, or source of investment and expenditure statement. These resources must be at least 130% of the value of the intended transaction, covering cash, cash equivalents, gold, stocks, and other assets.
This amnesty-like provision allows ineligible individuals a pathway to become eligible for major economic transactions — including purchasing luxury vehicles, acquiring high-value property, or investing in securities — by simply declaring sufficient resources. These declared resources will not trigger inquiries under the law, thus protecting taxpayers from scrutiny regarding their origin.
However, the FBR has outlined strict restrictions for those still classified as ineligible. Such persons are barred from:
• Purchasing a motor vehicle with an invoice value over Rs. 7 million;
• Acquiring or transferring immovable property worth more than Rs. 100 million;
• Investing more than Rs. 50 million in mutual funds, stocks, or similar instruments, unless it is a new investment;
• Withdrawing over Rs. 100 million in cash from bank accounts.
An economic transaction involving exchange of already declared capital assets will also be treated as valid cash-equivalent for eligibility, according to the FBR.
The FBR confirmed that this new system, offering an indirect amnesty, will not apply to non-residents or public companies, except for cash withdrawals. The exact implementation date will be notified by the federal government through the official Gazette. This marks a strategic shift by the FBR to bring more undocumented wealth into the formal sector through a limited-scope amnesty program.