KARACHI – Shabbar Zaidi, Pakistan’s top tax expert and former chairman of the Federal Board of Revenue (FBR), has raised serious concerns over the revised Wealth Tax Statement introduced for the 2025 tax period.
Under the new form, taxpayers are now required to disclose the “Estimated Current Market Value” of their assets. Zaidi argues that this amendment contradicts the fundamental concept of a wealth statement under Section 116 of the Income Tax Ordinance, 2001, and should be withdrawn immediately.
Zaidi explained that the Wealth Statement is already a unique requirement of Pakistan’s tax code. “There is no such obligation in almost all countries, including India and the UK,” he said, noting that this distinction was also documented in his book Taxation of Non-Residents and further discussed by Justice Maqbool Baqir in the Qazi Faiz Isa case.
According to Zaidi, the Wealth Statement is not wholly related to annual income. Increases or decreases in net wealth may occur through events unrelated to taxable income, such as gifts or inheritance. Therefore, compelling taxpayers to declare market value distorts the real purpose of the statement, which is simply to reconcile changes in wealth with declared income.
He further noted that historically, the wealth statement originated in Section 22(4A) of the Income Tax Act, 1922, when officers were authorized to call for a statement of assets to ensure disclosure of income. Later, under Section 58(2) of the repealed Income Tax Ordinance, 1979, compulsory filing was introduced, but always on the principle of cost accounting, not fluctuating market values.
Zaidi also emphasized the constitutional limitations of such a prescription. “The Constitution only empowers the legislature to tax income. While additional information such as a wealth statement can be sought to confirm income disclosure, no law can compel taxpayers to determine or disclose the market value of their assets,” he said.
Drawing a distinction between the current Wealth Statement and the repealed Wealth Tax Act, 1963, Zaidi explained that the latter had a defined valuation framework. In contrast, Pakistan’s current wealth statement carries no such legal basis for assigning market value. He pointed out that India’s Wealth Tax Act was repealed in 2015 for the same reason.
Concluding, Zaidi criticized the timing of the amendment, introduced just days before the filing deadline, and called for its removal. He recommended detailed deliberations during the next fiscal year rather than hasty prescriptions that complicate compliance.