Absence of implementing rules and government notification keeps high-value transaction restrictions on ineligible persons inoperative.
ISLAMABAD: More than a year after the introduction of Section 114C of the Income Tax Ordinance, 2001 through the Finance Act, 2025, the Federal Board of Revenue (FBR) has yet to notify the rules required for its implementation, leaving one of the government’s key tax enforcement measures dormant.
The provision was introduced to restrict high-value economic transactions by persons who do not meet prescribed tax compliance requirements. However, despite becoming part of the law, the absence of implementing rules and a notification to bring the restrictions into force has prevented its practical application.
Restrictions on high-value transactions
Section 114C provides that an “ineligible person” cannot undertake certain high-value transactions above prescribed thresholds.
Under the law, the restrictions apply to:
• Purchase, booking or registration of a motor vehicle valued at more than Rs7 million.
• Purchase or transfer of immovable property with a fair market value exceeding Rs100 million.
• Investment in securities, debt securities, mutual funds or money market instruments exceeding Rs50 million in a financial year.
• Annual cash withdrawals exceeding Rs100 million from all bank accounts held by an individual.
The measure was introduced to encourage documentation of the economy by linking access to major financial transactions with tax compliance.
Who qualifies as an eligible person?
The law defines an eligible person as an individual who:
• Has filed an income tax return for the immediately preceding tax year; and
• Has sufficient financial resources declared in a wealth statement, financial statements or a statement of sources of investment and expenditure to support the proposed transaction.
For individuals, eligibility may also extend to immediate family members, including parents, a spouse and dependent children.
Anyone who does not satisfy these conditions is regarded as an ineligible person for the purposes of Section 114C.
Rules and notification still awaited
Although Section 114C was enacted through the Finance Act, 2025, sub-section (5) stipulates that the restrictions will only become effective from a date notified by the Federal Government through the official Gazette.
The provision also allows the government to revise the monetary thresholds specified in the Fifteenth Schedule before enforcement.
In addition, the law authorises the FBR to prescribe rules identifying cash-equivalent assets and establishing procedures for determining whether a taxpayer possesses sufficient declared resources to undertake the proposed transaction.
More than a year after the provision was enacted, neither the government notification nor the supporting rules have been issued.
As a result, manufacturers, provincial excise and taxation authorities, property registrars, banks, brokerage houses, mutual funds and other financial institutions currently lack the legal framework required to implement the restrictions.
Compliance objective
Section 114C was designed to strengthen tax compliance by linking participation in major economic transactions with income tax filing and documented financial capacity.
Rather than relying solely on audits and post-transaction enforcement, the provision seeks to prevent non-compliant individuals from purchasing expensive assets or making large investments unless they become eligible taxpayers or are able to explain the legitimate source of their funds.
Prescribed thresholds
| Transaction | Threshold |
| Purchase, booking or registration of a motor vehicle | Above Rs7 million |
| Purchase or transfer of immovable property | Above Rs100 million |
| Investment in securities, mutual funds or debt instruments | Above Rs50 million |
| Annual cash withdrawals from bank accounts | Above Rs100 million |
Implementation remains pending
Tax practitioners say Section 114C remains legally dormant until two key steps are completed: the Federal Government must notify the date on which the restrictions will take effect, and the FBR must issue the detailed operational rules needed for implementation.
Until then, the provision remains part of the Income Tax Ordinance, 2001, but cannot be enforced in practice, delaying one of the government’s principal measures aimed at strengthening tax compliance and restricting high-value transactions by non-compliant persons.