Section 114C allows restrictions on major purchases, investments and cash withdrawals, but its enforcement requires a separate government notification.

ISLAMABAD: The Federal Board of Revenue (FBR) has retained the legal framework for restricting certain economic transactions by non-compliant taxpayers, but the restrictions under Section 114C of the Income Tax Ordinance, 2001 require a separate notification from the federal government before they can take effect.

Section 114C was introduced through the Finance Act, 2025. The FBR’s explanatory circular confirmed that the provision created a distinction between “eligible” and “ineligible” persons based on their tax filings and declared financial resources.

Under the provision, an ineligible person could face restrictions on purchasing or registering a motor vehicle above the prescribed threshold, acquiring or transferring high-value immovable property, making certain investments in securities or mutual funds, and withdrawing cash above the specified bank threshold.

The law defines an eligible person as someone who has filed the previous tax year’s return and has sufficient resources disclosed in the wealth statement or financial statements. A person can also qualify by filing a sources of investment and expenditure statement declaring sufficient funds.

“ Sufficient resources” are defined as 130% of cash and cash-equivalent assets, including cash, gold, stocks, bonds, receivables and other prescribed assets.

However, Section 114C(5) states that the restrictions will come into force only on a date appointed by the Federal Government through notification in the official Gazette. The government can also adjust the thresholds specified in the Fifteenth Schedule.

The provision excludes transactions by non-residents and public companies, except for the specified cash-withdrawal restriction.

Therefore, the inclusion of Section 114C in the tax framework for tax year 2027 does not by itself mean that all restrictions are currently operational. Their enforcement depends on the required government notification.