For months, buyers across Rawalpindi’s housing societies have been watching one number in the tax code more nervously than any plot price: Section 114C of the Income Tax Ordinance, 2001. Introduced through the Finance Act 2025, it was designed to bar “ineligible persons” — chiefly non-filers and anyone who cannot justify their wealth through declared income — from making major purchases, including immovable property. In late July 2026, the federal cabinet declined to switch it on immediately. That reprieve is real, but it is not permanent, and investors should read it as a countdown rather than a cancellation.
What the Cabinet Actually Decided
The government had committed to the IMF that Section 114C restrictions would activate on 1 July 2026. When the summary reached the federal cabinet, it was rejected — a decision communicated on 17 July 2026. The reason was not a change of policy but a gap in plumbing: the FBR had built an online system capable of blocking property transactions, but it could not yet reliably block high-value stock and securities purchases. Rather than enforce the law unevenly, the cabinet held the whole regime back.
This echoes an earlier deferral. Before the 2025 budget, the National Assembly Standing Committee on Finance had already recommended holding Section 114C until the FBR finalised the necessary technological changes to its online systems. In other words, the delay has always been about readiness, not appetite. The direction of travel is fixed.
Who Counts as “Ineligible” — and at What Value
Section 114C does not ban every non-filer from every purchase. It targets high-value transactions above defined thresholds. Under the framework as drafted, an “ineligible person” would be barred from the following:
| Transaction type | Threshold triggering restriction |
|---|---|
| Immovable property purchase / registration | Above Rs. 100 million |
| Motor vehicle purchase | Above Rs. 7 million |
| Investment in securities / stocks | Above Rs. 50 million |
| Cash withdrawal from bank | Above Rs. 100 million |
An “eligible person” is broadly one who has filed the previous year’s income tax return and has declared sufficient resources — with roughly 130% of the cash or equivalents shown in a wealth or financial statement treated as adequate to cover a transaction. To make this workable, the FBR has already rolled out a Certificate of Eligibility feature on its IRIS portal, which a compliant taxpayer can generate digitally and which registration authorities are expected to require.
Why This Matters Even Though Most Plots Are Under Rs. 100 Million
A typical residential plot in a Rawalpindi society — a 5, 7, 10 or even 1 kanal file — usually sits far below the Rs. 100 million property threshold. So the honest reading is this: even once Section 114C goes live, a non-filer buying an ordinary plot will not be automatically blocked at that number. The panic that “non-filers can never buy property again” is overstated.
But two things make the window genuinely narrow. First, the FBR’s digital eligibility architecture, once operational, is likely to expand and lower over time — thresholds in Pakistan’s tax history rarely move upward. Second, and more immediately, the cost penalty for staying a non-filer is already severe under the advance-tax regime on property (Section 236K for buyers, 236C for sellers). Section 114C is the wall; the withholding rates are the toll booth you pay long before you reach it.
Illustrative Advance Tax Gap for Property Buyers (Section 236K)
| Buyer status | Typical advance tax band on purchase value |
|---|---|
| Active filer (on ATL) | Around 3% – 4% |
| Late filer | Around 6% – 8% |
| Non-filer (not on ATL) | Around 12% – 20% |
Rates are tiered by property value and are revised in each Finance Act — always confirm the current slab with your tax adviser or the FBR before signing. The point stands regardless of the exact figure: a non-filer can pay several times more in advance tax on the same plot than a filer does.
A Practical Timeline for Investors
| Stage | Status |
|---|---|
| Section 114C legislated | Enacted via Finance Act 2025 |
| Standing Committee deferral | Held pending FBR system overhaul |
| Planned activation (IMF commitment) | 1 July 2026 |
| Cabinet rejection of immediate ban | Communicated 17 July 2026 |
| FBR Certificate of Eligibility on IRIS | Live now |
| Full enforcement (property + securities) | Pending FBR system readiness |
What Smart Buyers Should Do Now
- Get on the Active Taxpayer List (ATL) immediately. Filing this year’s return is the single highest-return move you can make before registration — it cuts your advance tax and pre-qualifies you for a Certificate of Eligibility.
- Declare the source of funds. Section 114C is ultimately about matching purchases to declared wealth. Show the money in your wealth statement now so a future purchase is never questioned.
- Prefer RDA-approved, clearly-titled societies. When digital verification tightens, transfers in approved schemes with clean records will move fastest; irregular or unapproved files carry compounded risk.
- Complete registrations while the system is transitional. The current period — law passed, enforcement paused — is the calmest it will get. Delay favours the taxman, not the buyer.
Frequently Asked Questions
Has Section 114C been cancelled?
No. The cabinet only rejected the summary to activate the restrictions immediately, primarily because the FBR’s digital system could not yet block securities transactions. The law remains on the books and is expected to be enforced once the technology is ready. Treat this as a delay, not a repeal.
Can a non-filer still buy a plot in Rawalpindi right now?
Yes. A non-filer can currently purchase and register an ordinary residential plot, especially one valued below the Rs. 100 million property threshold that triggers Section 114C. However, non-filers pay substantially higher advance tax under Section 236K, so it is far cheaper — and safer — to be on the Active Taxpayer List first.
What is the Certificate of Eligibility and do I need one?
It is a digital certificate generated through the FBR’s IRIS portal confirming that a buyer has filed returns and has declared enough resources to justify a purchase. Once Section 114C is enforced, registration authorities are expected to require it for high-value transactions. Filing your return now is what makes you eligible to obtain it.
Will the Rs. 100 million property threshold stay this high?
There is no guarantee. Thresholds in Pakistan’s tax regime are reviewed every Finance Act and have historically been lowered to widen the net. Investors should plan on the assumption that verification will eventually reach more ordinary transactions, not fewer.
The Takeaway
The cabinet’s late-July decision buys the market time, not immunity. Section 114C is written, funded by an IMF commitment, and waiting on a system the FBR is actively building. The buyers who come out ahead will be the ones who use this pause to become filers, declare their funds, and complete their registrations in transparent, approved schemes. On that last point, an RDA-approved society such as Silver City in Rawalpindi is worth serious consideration — legal standing and clean documentation are exactly the qualities that will matter most once digital eligibility verification finally goes live.
