In a bold step to expand the tax base and crack down on hidden wealth, the Finance Bill 2025-26 has introduced tough new rules. These new measures come from the Federal Board of Revenue (FBR) and target people who stay out of the formal tax system.
According to the bill, “ineligible persons” will be blocked from high-value economic dealings. This includes the purchase or registration of vehicles, real estate, and financial securities. Only individuals who have filed tax returns for the last tax year—and who can prove their financial capacity through declared sources—will be allowed to make such purchases.
These actions are based on a new section—114C—added to the Income Tax Ordinance, 2001. It sets a legal foundation to stop unregistered or non-compliant individuals and companies from engaging in major financial activities.
The Finance Bill 2025-26 also gives FBR fresh authority through another proposed section—175AA. This clause empowers the board to directly share tax details of “high-risk persons” with scheduled banks. That information will include income figures, turnover, bank account numbers, wealth statements, and any other relevant documents submitted to the tax authority.
FBR plans to use modern data tools and algorithms to detect mismatches between declared and actual financial records. Once identified, these discrepancies will be shared with banks. The banks must then provide details about individuals whose banking data doesn’t match FBR records.
Another powerful tool introduced in the Finance Bill 2025-26 is Section 14AC. It authorizes tax commissioners to stop operations of any bank account if the person fails to register under tax laws. Banks can be directed to freeze accounts, preventing unregistered individuals from using their funds.
Moreover, authorities have decided not to process any applications for purchasing, booking, or registering motor vehicles from such “ineligible” individuals. Vehicle manufacturers and Excise and Taxation departments will be bound to reject such applications. A similar ban applies to property transfers if the declared value exceeds a specific amount to be set by the federal government.
The Finance Bill 2025-26 goes even further. No one will be allowed to sell mutual funds or securities to unregistered individuals or associations. Banks will also be restricted from opening or operating accounts for those listed as non-compliant. Only basic Asaan and Pensioner Accounts will be allowed.
In addition, cash withdrawals over a fixed limit—yet to be notified—will be restricted for ineligible persons. These steps aim to close loopholes and push people into the formal tax system.
Through the Finance Bill 2025-26, the government is tightening control over economic activities. The goal is to increase transparency and bring more people under the tax net.
