Section 116A Explained: Foreign Income & Assets Statement in Pakistan (2025 Guide)
Table of Contents
- What Is Section 116A?
- Who Must File the Foreign Income & Assets Statement?
- What Must Be Declared?
- How It Connects to Your Annual Tax Return
- Real-Life Anecdote: The Sialkot Exporter Who Almost Missed It
- Step-by-Step Filing Guide
- Penalties for Non-Compliance
- Criminal Prosecution Provisions
- Real-Life Anecdote: The NRP Who Stayed Compliant
- Common Mistakes to Avoid
- FAQs on Section 116A
- How Trusty Consulting Can Help
What Is Section 116A?
Pakistan’s tax law has always required residents to declare domestic income and wealth. However, with the growing integration of Pakistani professionals and businesses into the global economy, FBR recognised that a separate, dedicated framework was needed for foreign income and foreign assets. The result was Section 116A of the Income Tax Ordinance 2001, inserted through the Finance Act 2018.
This provision requires qualifying resident taxpayers to file a Foreign Income and Assets Statement alongside their regular income tax return. In simple terms, if you are living in Pakistan and earning abroad — or if you own significant assets in a foreign country — the government now wants a full picture of that financial activity.
For businessmen, exporters, and professionals in Sialkot and across Pakistan, this is an increasingly important obligation. Sialkot’s thriving export sectors — sports goods, surgical instruments, and leather goods — have long had commercial ties with foreign markets. Many local entrepreneurs now hold foreign bank accounts, overseas investments, or property abroad. Section 116A directly speaks to them.
Furthermore, Pakistan is actively participating in international information-sharing frameworks, which means FBR has growing visibility into offshore financial activity. Non-disclosure is therefore a serious risk — not merely a technical oversight.
Who Must File the Foreign Income & Assets Statement?
Under Section 116A(1) of the Income Tax Ordinance 2001, the filing obligation applies to:
Every resident taxpayer being an individual who meets either of the following thresholds:
| Criterion | Threshold |
|---|---|
| Foreign Income | USD 10,000 or more in the tax year |
| Foreign Assets | Total value of USD 100,000 or more |
Both thresholds are stated in United States Dollars (USD). If you meet either criterion, you are legally required to furnish the statement. Meeting both simultaneously does not create a double obligation — one statement covers both.
In addition, it is important to note that:
- This obligation applies only to individuals who are resident taxpayers. A resident individual under Section 82 is someone present in Pakistan for 183 days or more during the tax year, or a Pakistani citizen not resident in any other country.
- Companies and associations of persons (AOPs) are not covered under this specific provision.
- A resident individual required to file under Section 116A is also separately obligated to furnish a return of income under Section 114(1)(x) of the Ordinance — this is a standalone filing trigger.
Therefore, any Pakistani individual living in the country who earns foreign-source income (freelancing income in USD, rental income from abroad, dividends from a foreign company, salary from an overseas employer) or holds substantial overseas assets must pay close attention to this section.
What Must Be Declared?
The Foreign Income and Assets Statement must be filed in the prescribed form and verified in the prescribed manner. Under Section 116A(1), the statement must include full particulars of the following three categories:
(a) Total Foreign Assets and Liabilities
You must disclose the complete picture of all foreign assets and any corresponding liabilities as they stood on the last day of the tax year (i.e., 30 June). This includes:
- Foreign bank accounts and deposits
- Overseas real estate or immovable property
- Foreign shares, bonds, or securities
- Interest in a foreign business or partnership
- Foreign trusts or beneficial interests
- Any other asset held outside Pakistan
Liabilities against these assets (such as foreign mortgages or loans) are also to be stated.
(b) Foreign Assets Transferred During the Year
If you transferred any foreign asset to another person at any point during the tax year, this too must be disclosed. The statement must include details of the transfer and the consideration received — meaning the price or value at which the asset changed hands.
(c) Foreign Income and Related Expenditure
Complete particulars of any foreign-source income earned during the year must be stated. Alongside this, you must also disclose any expenditure that was wholly and necessarily incurred for the purpose of earning that foreign income.
This approach mirrors the framework used for domestic income declarations. The guiding principle is full transparency — FBR wants not just the income figure, but the economic context around it.
How It Connects to Your Annual Tax Return
Section 116A does not operate in isolation. Under Section 114(1)(x), any resident individual required to file a foreign income and assets statement under Section 116A is independently obligated to file a return of income. Furthermore, under Section 114(2)(f), a return of income must be accompanied by a foreign income and assets statement where Section 116A applies.
Similarly, Section 118 confirms that the method of furnishing a foreign income and assets statement under Section 116A follows the same rules applicable to returns and wealth statements. For those with salary income of five hundred thousand rupees or more, electronic filing is mandatory, and the foreign income and assets statement must accompany the return.
In practical terms: if Section 116A applies to you, you cannot simply file your regular tax return and consider the matter closed. The foreign income and assets statement is a mandatory attachment — omitting it means your return is effectively incomplete.
Real-Life Anecdote: The Sialkot Exporter Who Almost Missed It
Mr. Asif Butt is a sports goods manufacturer based in Sialkot. His factory supplies equipment to buyers across the UK, Germany, and the UAE. Over the years, Asif had opened a business account with a UK bank to simplify international payments. By the end of last tax year, that account held the equivalent of over USD 120,000.
However, when Asif sat down with his accountant to prepare his return, his tax advisor failed to ask about foreign holdings. The return was filed — income declared, tax paid. Everything appeared in order.
Three months later, Asif received a written notice from the Commissioner under Section 116A(2), requiring him to furnish a foreign income and assets statement. He had clearly met the USD 100,000 threshold. Not only was he now required to file the statement on an FBR-specified date, but he also faced exposure to a penalty of 2% of the value of his foreign assets for each year of default under the penalty provisions.
Fortunately, Asif acted quickly. He filed the statement, engaged with the Commissioner, and averted a larger legal issue. But the lesson was clear: simply paying income tax is not enough. Foreign asset disclosure is a separate, equally important obligation.
Had Asif consulted a Sialkot tax consultant who was familiar with Section 116A from the outset, the notice — and the stress that came with it — could have been avoided entirely.
Step-by-Step Filing Guide
Here is a practical guide for filing the Foreign Income and Assets Statement under Section 116A:
- Determine Your Residency Status Confirm that you are a resident individual for the relevant tax year (present in Pakistan for 183 or more days, or a Pakistani citizen with no foreign residency). Non-residents are not covered by this provision.
- Check the Thresholds Review your finances for the tax year:
- Is your total foreign-source income USD 10,000 or more?
- Is the total value of your foreign assets USD 100,000 or more? If either answer is yes, proceed to the next step.
- Gather Documentation Collect the following records:
- Foreign bank statements as of 30 June
- Title deeds or ownership documents for foreign property
- Foreign brokerage or investment account statements
- Records of any asset transfers made during the year
- Evidence of foreign income (remittance receipts, employer letters, dividend vouchers)
- Calculate Liabilities Note any outstanding foreign loans, mortgages, or financial obligations tied to your overseas assets.
- Log in to FBR IRIS Portal Access the FBR IRIS Portal using your NTN and credentials.
- Access the Foreign Income & Assets Form Navigate to the declaration section and locate the prescribed form for the foreign income and assets statement. This is a structured form where you will input all three categories of information — assets, transfers, and income.
- Complete the Wealth Statement Your wealth statement under Section 116 must also reflect your foreign assets consistently. Ensure the figures reconcile.
- File the Statement With Your Income Tax Return The foreign income and assets statement must be submitted together with your annual income tax return. Do not file them separately or on different dates.
- Retain Copies and Supporting Documents Keep authenticated copies of all documents submitted, along with acknowledgement receipts from the IRIS portal. These may be required if the Commissioner requests further information.
- Respond Promptly to Any Commissioner Notice If you receive a notice under Section 116A(2), respond by the date specified in the notice. Failure to comply carries criminal prosecution risk under Section 195A.
Penalties for Non-Compliance
The consequences of failing to file the Foreign Income and Assets Statement within the due date are serious and clearly defined under the penalty provisions of the Income Tax Ordinance 2001.
Under Serial No. 1AAA of Section 182 (Offences and Penalties Table):
“Where any person fails to furnish a foreign assets and income statement within the due date — such person shall pay a penalty of 2% of the foreign income or value of the foreign assets for each year of default.”
This is not a fixed fine. It is a percentage-based, compounding penalty. Consider what this means in practice:
| Scenario | Foreign Asset Value | Penalty Per Year of Default |
|---|---|---|
| Single year default | USD 100,000 | 2% = USD 2,000 |
| Two years default | USD 150,000 | 2% × 2 years = 4% = USD 6,000 |
| Three years default | USD 200,000 | 2% × 3 years = 6% = USD 12,000 |
Furthermore, the Commissioner holds an independent power under Section 116A(2) to issue a written notice requiring any individual who was required to file but failed to do so, to submit the statement on a specified date. Non-response to this notice elevates the matter from a penalty issue to a criminal prosecution risk.
Additionally, if a person fails to declare an offshore asset and the revenue impact of such concealment is ten million rupees or more, Section 192B applies — carrying imprisonment of up to three years or a fine of up to five hundred thousand rupees, or both.
Criminal Prosecution Provisions
Beyond civil penalties, the Income Tax Ordinance 2001 contains criminal provisions that apply to offshore non-disclosure.
Section 195A — Non-Compliance With Notice
Any person who, without reasonable excuse, fails to comply with a notice under sub-section (2) of Section 116A shall commit an offence punishable on conviction with imprisonment up to one year or with a fine up to fifty thousand rupees, or both.
This provision applies when the Commissioner has already issued a notice requiring you to file the statement, and you still fail to comply. The words “without reasonable excuse” do provide some space for legitimate disputes — but the burden of demonstrating that excuse rests on the taxpayer.
Section 195B — Enabling Offshore Tax Evasion
Any enabler who enables, guides or advises any person to design, arrange or manage a transaction or declaration in such a manner which results in offshore tax evasion, shall commit an offence punishable on conviction with imprisonment for a term not exceeding seven years or with a fine up to five million rupees, or both.
This provision targets tax advisors, lawyers, or consultants who deliberately help individuals conceal foreign assets. It is a strong deterrent against professional misconduct and reinforces the government’s commitment to tackling offshore evasion.
Moreover, under Section 216(6B) and (6C), FBR is empowered to publish the names of offshore evaders and their enablers in print and electronic media where the evaded offshore tax equals or exceeds two and a half million rupees. Public naming is therefore a very real risk for those who choose non-disclosure.
Real-Life Anecdote: The NRP Who Stayed Compliant
Mr. Tariq Rehman is a Sialkot-based leather goods exporter who has been supplying to Italian fashion brands for over a decade. Through years of accumulated savings and smart investments, Tariq holds a portfolio of foreign securities and a flat in Dubai, with a combined value of approximately USD 180,000.
Unlike many of his peers, Tariq made it his practice to sit with a professional Sialkot tax consultant every year before the return filing season. He understood that his regular income tax return was only part of his compliance picture. With guidance from his advisor, he filed the Foreign Income and Assets Statement under Section 116A every year without exception.
When FBR cross-checked data received through international information exchange channels, Tariq’s profile showed full disclosure. No notices. No penalties. No stress.
“I never hid anything,” Tariq said with a simple calm. “But more importantly, I had an expert who made sure everything was filed correctly and on time.”
Tariq’s experience is not just reassuring — it is instructive. Proactive compliance, with professional support, is always less expensive than reactive damage control.
Common Mistakes to Avoid
When dealing with Section 116A compliance, taxpayers in Sialkot and across Pakistan commonly make the following errors:
- Assuming only earned income matters: Even passive foreign assets (a property, a bank account balance) trigger the obligation if they exceed USD 100,000. Income is not the only trigger.
- Filing the income tax return without attaching the statement: Both must be filed together. A return without the accompanying statement is technically incomplete.
- Inconsistent wealth statements: Your Section 116 wealth statement and your Section 116A foreign income and assets statement must reflect consistent figures. Discrepancies attract scrutiny.
- Ignoring transferred assets: If you transferred a foreign asset during the year — even as a gift to a family member — it must be disclosed under Section 116A(1)(b) along with the consideration.
- Delaying after receiving a Commissioner notice: A notice under Section 116A(2) has a specified due date. Missing it triggers criminal prosecution risk under Section 195A.
- Believing foreign assets are untraceable: Pakistan participates in international data-sharing programs. FBR’s access to cross-border financial information is expanding rapidly.
FAQs on Section 116A
Q1: I am a Pakistani citizen living in Karachi. I have a savings account in the UK with USD 15,000. Do I need to file under Section 116A?
A: You would need to assess whether you meet either threshold. Your foreign income for the year may or may not reach USD 10,000, and your foreign asset value (USD 15,000) is below the USD 100,000 threshold. If neither threshold is met, Section 116A does not technically require a statement. However, your foreign balance should still be reflected in your wealth statement under Section 116 for consistency.
Q2: My wife also holds a foreign account. Does she file a separate Section 116A statement?
A: Yes. Section 116A applies to each individual separately. If your wife meets either threshold in her own right, she must file her own foreign income and assets statement independently.
Q3: What is the due date for the foreign income and assets statement?
A: It is filed together with the annual income tax return. For individuals, the standard due date is 30 September following the end of the tax year (30 June). The statement must accompany the return — it cannot be filed separately after the return is submitted.
Q4: I received a Commissioner’s notice under Section 116A(2). What should I do?
A: Engage a qualified tax professional immediately. The notice will specify a date by which the statement must be furnished. Failure to comply is a criminal offence under Section 195A. Responding promptly and accurately — ideally with professional assistance — is the correct course of action.
Q5: Does Section 116A apply to overseas Pakistanis (non-residents)?
A: No. Section 116A applies specifically to resident taxpayers who are individuals. Non-resident individuals are not covered by this provision. However, if an overseas Pakistani spends sufficient days in Pakistan to qualify as a resident under Section 82, they would then be subject to this obligation.
How Trusty Consulting Can Help
Filing the Foreign Income and Assets Statement under Section 116A is a detailed, technical obligation that goes far beyond filling in a simple form. It requires accurate valuation of foreign assets, careful reconciliation with your wealth statement, and a thorough understanding of what must be disclosed and what does not apply to your specific situation.
At Trusty Consulting, we specialise in Pakistani income tax compliance for individuals, exporters, and business owners — including those with complex cross-border financial profiles. Whether you are an exporter in Sialkot with overseas accounts, a professional with foreign investments, or an overseas Pakistani returning to residence status, our experienced team is here to guide you every step of the way.
Do not wait for a Commissioner’s notice to act. Proactive compliance is always simpler, less costly, and less stressful than responding to enforcement.
📞 WhatsApp us today: 03296325872 🌐 Visit our website: tconsultingpk.com 📍 Office: Kashmir Road, Sialkot, Pakistan
Trusty Consulting — Your trusted partner for tax compliance in Sialkot and beyond.