The Federal Board of Revenue (FBR) gained the authority to demand detailed wealth statements for Tax Year 2027, a provision that allows the agency to seek comprehensive information on taxpayers’ domestic and foreign assets, liabilities, and expenditures. This authority is granted under Section 116 of the Income Tax Ordinance, 2001.
Under Section 116, every resident individual taxpayer filing an income tax return must submit both a wealth statement and a wealth reconciliation statement alongside the return. The wealth statement must detail total assets and liabilities, encompassing foreign assets and liabilities.
Furthermore, the statement may cover the assets and liabilities belonging to the taxpayer's spouse, minor children, and other dependants. The FBR may also request specifics regarding assets, including foreign assets, that were transferred to another person during the specified time, along with the consideration received for such transfers.
Taxpayers face potential requirements to furnish details of expenditures made by themselves, their spouse, minor children, and dependants. For members of an association of persons, submitting wealth statements and wealth reconciliation statements with the association’s income tax return is mandatory.
Should a taxpayer spot an error or omission, they can submit a revised wealth statement and wealth reconciliation statement, providing reasons for the change, before receiving a notice under Section 122(9). However, the Commissioner retains the power to void a revision if the amendment fails to correct a genuine error or omission.
Before declaring a revision void, the taxpayer must first receive an opportunity to be heard. A five-year limit applies, meaning a wealth statement cannot be revised after the due date for filing the income tax return for the relevant tax year has passed by five years.
