A printed financial statement

The Wealth Statement: Who Has to File One and What Goes In It

ByFiler.pk

The wealth statement is the part of filing that people find uncomfortable, because it is not about income. It is about what you own, and about explaining how what you own changed during the year.

What it is

A wealth statement sets out your assets and liabilities at the end of the tax year, alongside the same figures for the year before. Attached to it is a reconciliation that has to account for the movement between the two.

The logic is simple. If your net worth grew by a certain amount during the year, that growth should be explained by your declared income, minus what you spent, plus anything you received that is not income, such as a gift or an inheritance. Where the increase cannot be explained, that is what the FBR is looking at.

Who has to file one

Under section 116 of the Income Tax Ordinance, a resident individual filing a return is generally required to file a wealth statement with it. The requirement has been broadened over the years, and the practical position now is that if you are a resident individual filing a return, you should expect to file one.

What goes in it

  • Immovable property, with cost and the year acquired
  • Vehicles
  • Bank balances and cash in hand
  • Investments, including shares, funds, savings certificates and prize bonds
  • Business capital, if you run one
  • Loans and advances you have given out
  • Household items and personal effects of significant value
  • Against all of that, your liabilities, including loans and mortgages

Two practical points

First, assets are normally declared at cost rather than at current market value. A plot bought in 2015 goes in at what you paid for it, not what it is worth today. People who declare current values create an unexplained jump in net worth for themselves.

Second, be consistent year to year. The reconciliation compares this year against last year, so an asset that appears from nowhere, or quietly disappears, invites a question. If you are correcting an earlier error, it is better to do so deliberately and be able to explain it.

Why the household expenses figure matters

The reconciliation includes what you spent on living. Understating it does not help you. If you declare modest expenses and a large increase in assets, the gap has to come from somewhere, and the return itself points at the problem.

The reconciliation, worked through

The reconciliation is one line of arithmetic, and seeing it written out removes most of the anxiety around it. It says: the change in what you own should equal what you brought in, less what you spent.

Take somebody whose declared net worth was Rs 8,000,000 at the start of the year and Rs 9,200,000 at the end — an increase of Rs 1,200,000. Over the same year they earned Rs 3,000,000 in salary, paid Rs 276,000 in tax, and received a gift of Rs 200,000 from a parent.

  • Income for the year: Rs 3,000,000
  • Less tax paid: Rs 276,000
  • Plus the gift received: Rs 200,000
  • Available: Rs 2,924,000
  • Less the increase in net worth: Rs 1,200,000
  • Leaves household and personal expenses of Rs 1,724,000 for the year — about Rs 144,000 a month

That reconciles, and it reconciles to a living cost that is plausible for the salary. Now suppose the same person declared expenses of Rs 400,000 for the year. The statement no longer balances: roughly Rs 1.3 million of asset growth has no source. Nothing has been concealed — the form itself has raised the question.

This is why understating living expenses backfires. It does not reduce your tax; it manufactures unexplained wealth in your own return.

Common questions

Do I declare property at cost or market value?
Normally at cost, with the year of acquisition. Declaring a current market value creates an unexplained jump in net worth that you then have to account for.

What about a gift or an inheritance?
Those belong in the reconciliation as a non-income source of funds. That is precisely what the line is for — leaving them out is what makes the statement fail to balance.

I got an earlier year wrong. What now?
Correct it deliberately and be able to explain it, rather than letting an asset quietly appear or vanish between two statements. A revision you initiate is a much better position than an inconsistency found for you.

Does a nil return need one?
The requirement follows from being a resident individual filing a return, not from having tax to pay.

Last updated: 28 July 2026

Sources

  • Income Tax Ordinance 2001, section 116 (wealth statement)
  • Income Tax Ordinance 2001, section 116 read with the reconciliation requirement
  • FBR, return and wealth statement filing guidance, Federal Board of Revenue (fbr.gov.pk)

This article gives general information about tax in Pakistan. It is not advice on your own situation. Rules and rates change, sometimes in the middle of a year. Before you act on anything here, check the current position with the FBR or a registered tax practitioner.

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