Karachi, September 29, 2023 – The Federal Board of Revenue (FBR) has taken a significant step in enhancing tax compliance by making the submission of a wealth statement mandatory for all income tax return filers.
This decision, based on Section 116 of the Income Tax Ordinance, 2001, reinforces the importance of transparent financial reporting in the country’s tax ecosystem.
The FBR, in a recent development, has mandated the submission of a wealth statement as an integral part of the income tax return filing process for the tax year 2023. According to sources within the FBR, the wealth statement is now considered a requisite document to complete the income tax return filing for any given tax year.
With the deadline for filing income tax returns for the tax year 2023 swiftly approaching on September 30, 2023, taxpayers are urged to ensure that their wealth statements, covering assets and liabilities up to June 30, 2023, are submitted alongside their income tax returns.
The authority to enforce the submission of a wealth statement is vested in the FBR under Section 116 of the Income Tax Ordinance, 2001. This section empowers a Commissioner of Inland Revenue to issue written notices requiring individuals to furnish a wealth statement in the prescribed format and verified manner. The wealth statement must detail:
(a) The individual’s total assets and liabilities as of the specified date(s) in the notice.
(b) The total assets and liabilities of the individual’s spouse, minor children, and other dependents as of the specified date(s) in the notice.
(c) Any assets transferred by the individual to another person during the specified period(s) in the notice, along with the consideration for such transfers.
(d) The total expenditures incurred by the individual, their spouse, minor children, and other dependents during the specified period(s) in the notice, including the details of these expenditures.
(e) A reconciliation statement of wealth.
In line with these requirements, every resident taxpayer who is an individual and files an income tax return for any tax year is obligated to furnish a wealth statement and wealth reconciliation statement for that year along with their tax return. Additionally, members of an association of persons are also required to provide wealth statements and wealth reconciliation statements for the year when submitting their association’s income tax return.
Should a taxpayer discover any omissions or incorrect statements in their wealth statement, they have the option to submit a revised wealth statement, along with a revised wealth reconciliation statement and reasons for the revision. However, this must be done before receiving a notice under subsection (9) of section 122 for the relevant tax year.
It is important to note that revisions to the wealth statement must serve the purpose of correcting a bona fide omission or incorrect statement. The Commissioner holds the authority to declare a revision as void if it is deemed to be otherwise, following a proper hearing.
To avoid any complications, taxpayers are reminded that wealth statements cannot be revised after the expiration of five years from the due date of filing the income tax return for that tax year.
This move by the FBR underscores the government’s commitment to increasing transparency and tax compliance across the nation, ultimately contributing to the economic development and stability of Pakistan. Taxpayers are encouraged to adhere to these requirements to ensure a seamless income tax return filing process and avoid any potential penalties or legal consequences.