The wealth statement under section 116, and how to make it balance
The wealth statement is where most people filing their own return stop. It is not hard, but it is unforgiving: it asks what you own, what you owe, and whether your declared income can explain the difference between this year and last. Here is what goes in it, what the reconciliation is really checking, and the handful of reasons it refuses to close.
Everyone filing an individual return
The wealth statement under section 116 of the Income Tax Ordinance goes in with your income tax return, not separately and not later. For an individual it is mandatory, so a freelancer filing a return files one too, however simple their affairs are. IRIS will not treat the return as finished without it.
For tax year 2026, which runs 1 July 2025 to 30 June 2026, the statement describes your position as at 30 June 2026 and is due with the return by 30 September 2026. If you have not started the return itself yet, begin with how to file a tax return as a freelancer in Pakistan and come back to this part.
Assets first, then what you owe
List everything you held on 30 June 2026, with a short description against each line so the figure means something a year from now. The categories FilerKaro asks for:
| asset | what to write against it |
|---|---|
| Bank balance | each account separately, balance on 30 June |
| Cash in hand | what you actually held, not a round guess |
| Vehicle | make, model and year, at what it cost you |
| Property | plot or house, location, at cost |
| Gold | weight and what it cost |
| PSX holdings | the portfolio value |
| Crypto | declared as an other asset, at cost |
| Other assets | equipment, receivables, money lent out |
Then the other side: loans you owe, whether to a bank, an employer or a family member. Money you have lent to someone else is an asset, not a liability. Your net wealth is the assets less the liabilities, and that total is your closing net wealth for the year.
Value things consistently, year after year. FilerKaro declares crypto at cost for exactly this reason: an asset marked up to today's price, with no sale behind the increase, turns into wealth your income cannot explain, and the reconciliation below is what notices.
Two dates, one movement
The statement is a comparison, not a snapshot. Opening net wealth is your position on 1 July 2025 and closing net wealth is your position on 30 June 2026. If you filed last year, the opening figure is not something you calculate: it is the closing net wealth you declared then, copied across. Using this year's opening bank balance instead is one of the most common ways the whole statement goes wrong.
If you did not file last year, you enter what you genuinely had at the start of the year and let the reconciliation explain the movement from there. Next year, this year's closing figure becomes the opening one, which is why it is worth getting right once.
What the reconciliation is checking
One line of arithmetic sits under the whole thing: opening net wealth, plus the income you declared, less what you spent on yourself, less the tax for the year, should equal the closing net wealth you listed. If it does not, you either earned something you did not declare or you own something you did not list. That is the question the statement is asking, and it is why it exists.
A freelancer with Rs 3,000,000 of export receipts taxed at 1% under section 154A:
| Opening net wealth at 1 Jul 2025 | Rs 1,200,000 |
| Income received this year | + Rs 3,000,000 |
| Personal expenses | − Rs 1,500,000 |
| Tax for the year | − Rs 30,000 |
| Closing net wealth it implies | Rs 2,670,000 |
If the assets you listed add up to Rs 2,670,000, the statement closes exactly. In practice it never does, so a small gap is tolerated: FilerKaro treats anything within 5% of closing net wealth as acceptable, which here is Rs 133,500 either way, and flags anything larger before you file rather than after a notice arrives.
Six reasons the gap is there
- An asset is missing. The second bank account, the motorbike, gold in the house, a laptop bought this year, money lent to a cousin. Anything you own on 30 June belongs on the list.
- Personal expenses are guessed low. Rent, food, utilities, travel, school fees, medical bills and one wedding add up faster than anyone expects. FilerKaro's own estimator runs from Rs 600,000 to Rs 4,200,000 a year because the true figure is almost always higher than the first guess.
- Income is counted short. Imported rows still waiting for your confirmation, and rows flagged as duplicates of another source, are excluded from the total on purpose. Confirm them and the income line rises.
- The opening figure is wrong. It must be last year's declared closing net wealth, not a bank balance, and not a number you reconstructed from memory.
- An asset was revalued. Property or crypto written up to today's price creates an increase with no income behind it. Keep the value you declared unless something actually changed hands.
- Money moved that is not income. A gift, an inheritance, a loan taken or repaid, a car registered in a relative's name. These move your net wealth without touching your income, and each one has a place in the statement.
Work through those in order and most gaps close. Do not force the number: an invented personal-expenses figure that makes the statement balance is a worse answer than a gap you can explain. If the gap comes from disposing of shares, property or crypto, capital gains are outside what FilerKaro computes and are worth taking to a chartered accountant before you file.
Where the figures actually go
Two places. In the wealth statement's Assets section, each item you listed maps to its matching row, and the total should read as your closing net wealth. In the Reconciliation table, you enter the personal expenses for the year, and the unexplained gap needs to stay inside that 5%.
Keep the evidence for six years: bank statements, the vehicle registration, the property papers, the gold receipt. The wealth statement is the part of the return most likely to be asked about later, and answering with paperwork takes an afternoon while answering from memory takes months.
Two things people ask here
- Who has to file a wealth statement in Pakistan?
- Every individual filing an income tax return files a wealth statement under section 116 with it. It is not a separate submission and it is not optional for freelancers: it goes in alongside the return, as at 30 June of the tax year.
- What happens if my wealth statement does not reconcile?
- A gap means the statement says you ended the year with wealth your declared income cannot explain. The fix is to find the cause rather than to force the figure: usually a missing asset, understated personal expenses, income counted short, or a wrong opening figure. FilerKaro treats a gap inside 5% of closing net wealth as acceptable and flags anything larger before you file.
Let the reconciliation do itself
FilerKaro builds this statement as you answer plain questions: you list what you own, drag the personal-expenses estimate until the gap closes, and watch the reconciliation update line by line. The filing pack then carries the whole walkthrough, with your figures already written into each instruction. Rs 2,500 for tax year 2026, and the estimate before it is free.