Islamabad, July 9, 2025 — In a dramatic turn of events, the much-publicized law to impose economic restrictions on ineligible persons has been quietly altered through a seemingly subtle clause—raising serious concerns over the intent and timing of its enforcement.
The Finance Act, 2025, passed with considerable fanfare, was expected to implement a strong deterrent against non-compliant taxpayers. Section 114C, inserted into the Income Tax Ordinance, 2001, was widely anticipated to restrict major economic transactions by ineligible persons—individuals who have taxable income but have failed to enter the documented economy.
However, tucked deep within sub-section (5) of Section 114C lies a caveat that has sparked controversy. The clause reads:
“All or any of the restrictions or limitations imposed on the ineligible person under this section shall come into force on such date as the Federal Government may, by notification in official Gazette, appoint…”
This wording essentially postpones the enforcement of the key restrictions, handing the federal government unchecked discretion to decide when—or if—these measures will come into effect.
In an exclusive conversation with PkRevenue, a senior official from the Federal Board of Revenue (FBR), speaking on condition of anonymity, confirmed that the restrictions are not effective from July 1, 2025. “Implementation is deferred. The government will issue a notification when ready,” the official stated.
Zeeshan Merchant, former President of the Karachi Tax Bar Association (KTBA), echoed the concern. “This clause wasn’t even included in the original Finance Bill—it was slipped in later, during the passage of the Finance Act. It’s a classic parliamentary sleight of hand,” he said. “The government now holds the authority to indefinitely delay the enforcement of restrictions aimed at non-filers and ineligible persons.”
So, what exactly does Section 114C restrict?
The section outlines specific prohibitions on high-value transactions by ineligible persons, including:
• Booking, registration, or purchase of motor vehicles exceeding a prescribed value.
• Buying or transferring immovable property above certain thresholds.
• Investments in securities, mutual funds, or similar financial instruments beyond limits.
• Large cash withdrawals from banks over defined caps.
These measures were designed to curb undocumented economic activity and encourage return filing, but without enforcement, the intent falls flat.
To understand who qualifies, the law defines an “eligible person” as one who has filed a tax return for the previous year and disclosed sufficient resources in their wealth or financial statement. In contrast, an “ineligible person” is someone who has failed to meet these conditions.
The definition of sufficient resources is also highly specific—it must equal at least 130% of cash-equivalent assets, including declared cash, gold, receivables, or other financial instruments. Even these resources must be properly declared in either a sources of investment statement or a filed return.
Notably, immediate family members of an eligible individual (spouse, parents, dependent children) are also considered eligible, allowing families some flexibility.
Despite the clarity of the mechanism, its restrictions remain suspended—an outcome critics say was likely engineered by design. “This is a textbook example of passing a law with teeth, then filing them down with a vague implementation clause,” one tax expert commented.
Adding fuel to the fire, the fact that this delaying provision was not in the original bill but added later raises questions about legislative transparency. Business leaders and tax professionals now worry that this could erode public trust in future reform efforts.
Merchant warned, “If the law was truly meant to bring undocumented individuals into the net, these restrictions must be applied universally and without delay. Allowing discretionary implementation gives rise to favoritism and selective enforcement.”
In the broader context, the debate over Section 114C is more than just a legal technicality—it’s a litmus test for the government’s resolve to expand the tax base and punish habitual non-filers. With over millions of individuals reportedly falling under the ineligible category, the stakes are high.
Until the federal government issues the official notification, however, ineligible individuals can continue with high-value economic activities, unaffected by the law that was meant to bar them.
The question now is: will the government ever trigger these restrictions? Or has the Parliament simply passed a law designed to sound tough but act soft? The business and tax community waits and watches—with rising skepticism.