July 1, 2026 is five days away. If you have not filed your income tax return for Tax Year 2025, you are an ineligible person under the Income Tax Ordinance 2001 — and FBR has built a legal wall around your financial life. Here is exactly what that means, backed by the law as it stands today.
Section 114C: The law that locks non-filers out of big transactions
The Finance Act 2025 inserted Section 114C into the Income Tax Ordinance 2001. It defines two categories of people:
Eligible person: Someone who has: (a) filed a return of income for the preceding tax year and has sufficient resources — declared cash and equivalent assets equal to at least 130% of the transaction value in their wealth statement or financial statement filed on IRIS; or (b) filed a Sources of Investment and Expenditure Statement on IRIS declaring sufficient resources for that specific transaction.
Ineligible person: Anyone who does not meet the above conditions — either has not filed a return, or has not declared sufficient resources for the transaction.
Under Section 114C and the Fifteenth Schedule, ineligible persons are barred from the following transactions:
1. Buying or registering a motor vehicle above Rs. 7 million
If the declared value of the vehicle exceeds Rs. 7,000,000 — whether imported, locally assembled, or purchased at auction — no manufacturer and no vehicle registration authority can process your booking, purchase, or registration. The seller and the registrar become legally liable if they do.
Exempt under Section 114C(2): rikshaws, motorcycles, tractors, and pick-up vehicles with engine capacity up to 800cc are not subject to this restriction.
2. Buying or transferring residential property above Rs. 50 million
No property registration authority can record, attest, or process the transfer of any residential immovable property with a Fair Market Value exceeding Rs. 50,000,000 unless the buyer is an eligible person. (Section 114C(1)(b) covers all immovable property — the Rs. 50M residential and Rs. 100M commercial thresholds are FBR’s announced implementation values, to be confirmed by Federal Government gazette notification.)
3. Buying or transferring commercial property above Rs. 100 million
The threshold is higher for commercial property — Rs. 100,000,000 — but the block is the same. The registrar cannot process the transaction for an ineligible person.
4. Investing more than Rs. 50 million in securities or mutual funds per year
Banks, investment platforms, and mutual fund houses cannot open or maintain investment accounts where total annual investments by an ineligible person exceed Rs. 50,000,000.
5. Large cash withdrawals
Cash withdrawals above the notified threshold are blocked. Even below the Section 114C threshold, FBR already imposes a 0.8% advance tax on every cash withdrawal by anyone not on the Active Taxpayer List (Section 231AB) — filers pay zero.
Important — gazette notification required: Under Section 114C(4), each of the above restrictions only comes into force upon a separate official gazette notification by the Federal Government. The thresholds above are as announced by FBR in the Budget 2025-26 Salient Features. Verify current activation status at iris.fbr.gov.pk before any transaction.
Section 114C is the wall. But the taxes are already hitting you today.
Section 114C requires a Federal Government gazette notification to activate each threshold. What does not require a notification — because it is already active — is a system of punitive withholding tax differentials that are draining non-filers right now.
Here is the current cost of being a non-filer in Pakistan as of today, taken directly from the FBR Withholding Tax Rate Card (Finance Act 2025, effective July 1, 2025 through June 30, 2026 and continuing under Finance Act 2026):
| Transaction | Filer rate | Non-filer rate | Section |
|---|---|---|---|
| Mobile & internet subscription | 15% | 75% | 236 |
| Cash withdrawal | 0% | 0.8% per withdrawal | 231AB |
| Vehicle purchase (1601–1800cc example) | 3% of value | 9% of value | 231B |
| Property purchase up to Rs. 50M | 1.5% | 10.5% | 236K |
| Property sale up to Rs. 50M | 4.5% | 11.5% | 236C |
| Rental income withheld (company) | 15% | 30% | 155 |
The mobile and internet number is the one that surprises most people: 75% of your phone bill or internet recharge is deducted as advance tax if you are not on the ATL. For a Rs. 1,000 mobile top-up, Rs. 750 goes to FBR. For a filer, it is Rs. 150.
NEW from July 1, 2026: Capital gains on listed securities
The Finance Bill 2026 (Budget 2026-27) withdrew a longstanding exclusion that protected non-ATL persons from enhanced capital gains tax rates on listed securities. From Tax Year 2027 — starting July 1, 2026 — non-ATL investors in the stock market will face the enhanced Tenth Schedule rates on capital gains. If you trade on the PSX and you are not on the ATL, your gains are taxed at a significantly higher rate starting this Monday.
How to become an eligible person before July 1
You have two routes:
Route 1 — File your Tax Year 2025 return: Log in to IRIS at iris.fbr.gov.pk, complete your income tax return for TY2025, and submit it. You will appear on the ATL within the next update cycle. The filing deadline for individuals is September 30, 2026, but filing now makes you eligible immediately for Section 114C purposes.
Route 2 — File a Sources of Investment and Expenditure Statement: If you need to make a specific large transaction now and have not filed a full return yet, you can file this statement on IRIS for that particular transaction. Importantly, this declaration is legally protected from Section 111 (unexplained income) — FBR cannot use it to question where the money came from.
Immediate family members — parents, spouse, and dependent children — of an eligible person are also treated as eligible. So if one earner in the household is compliant, transactions by their immediate family members are covered.
The bottom line
Section 114C is not a future threat. It is the law. The gazette notification sets the activation date, but FBR has been signalling enforcement since the Finance Act 2025 was passed. Meanwhile, the WHT penalties — including 75% on your mobile bill and 10.5% on property purchases — are active right now.
July 1 is not a deadline to file. The filing deadline is September 30. But July 1 is the start of a new tax year when FBR’s enforcement posture typically intensifies. If you have been delaying, this is the week to act.
Need help filing your return or registering for NTN? ClearConcept Academy offers complete tax consultancy services alongside FIA, ACCA, and Pakistan Taxation training. Contact us on WhatsApp: +92 309 6755747 or email info@clearconcept.academy.
Sources: Income Tax Ordinance 2001 (as amended), Finance Act 2025, Finance Bill 2026, FBR Withholding Tax Rate Card (Finance Act 2025), FBR Budget 2026-27 Salient Features. All rates verified from official FBR documents.