Islamabad, March 29, 2026 – The Federal Board of Revenue (FBR) has so far been unable to enforce newly introduced restrictions on ineligible persons under Section 114C of the Income Tax Ordinance 2001 for the fiscal year 2025–26, raising concerns about regulatory delays and tax compliance gaps.
The landmark provision, introduced through the Finance Act 2025, places responsibility on the FBR to restrict certain high-value economic transactions for individuals classified as ineligible taxpayers. However, despite the law being incorporated into the tax framework, its enforcement remains stalled due to the absence of an official notification in the government gazette.
Under Section 114C, multiple financial and economic restrictions are outlined to curb undocumented wealth and promote tax compliance. These include limitations on the purchase and registration of motor vehicles exceeding a certain value, restrictions on property transactions above defined thresholds, and controls on investments in securities, mutual funds, and related financial instruments. Additionally, the law places caps on cash withdrawals from bank accounts to discourage large-scale untraceable transactions.
The provisions also define “eligible” and “ineligible” persons based on their tax filing status, declared income, and financial transparency. Eligible individuals are those who have filed tax returns and can justify their financial capacity through wealth statements or investment declarations, while ineligible persons are those lacking such documentation.
Despite the clarity of the legislation, its enforcement hinges on a formal notification by the federal government specifying the effective date and operational thresholds. Without this notification, regulatory bodies such as vehicle registration authorities, property registrars, and financial institutions are unable to implement the restrictions.
Experts believe that the delayed implementation is hampering efforts to broaden the tax base and reduce the informal economy. Section 114C was designed to enhance financial transparency by linking major economic activities with verified tax compliance.
The law also outlines significant thresholds, including a limit of approximately Rs7 million for vehicle transactions, Rs100 million for property dealings, and Rs50 million for investments in financial securities, along with annual cash withdrawal limits.
While policymakers view Section 114C as a critical tool for improving tax discipline, the current enforcement gap highlights administrative challenges. Stakeholders are now awaiting swift government action to issue the necessary notification, enabling full implementation of the law and strengthening Pakistan’s tax compliance framework.