In Pakistan, gifting money to children, parents, siblings, or close relatives is a custom. However, for tax purposes, the Federal Board of Revenue (FBR) has strict regulations regarding how gifts should be given, declared, and accounted for to be valid and acceptable under tax laws. Here, you will learn how to give a gift legally in Pakistan as per FBR guidelines in the tax year 2025-26.
This article explains to you how a gift should be given or received under the law, as per FBR’s new Tax Year 2025–26 rules.
What is Considered a Gift Under Pakistani Law?
According to Pakistani law and tax guidelines, a gift (hiba) is the voluntary transfer of:
- Cash
- Movable assets (e.g., cars, gold, electronics)
- Immovable property (e.g., land, house, plot)
A gift is from one person to another without any return or compensation.
Common Forms of Gifts in Pakistan
| Type of Gift | Examples |
|---|---|
| Cash | Bank transfer, cheque, cash in hand |
| Movable Property | Jewelry, vehicles, electronics, livestock |
| Immovable Property | Plot, land, house, shop |
Applicable in Tax Year 2025–26
The information in this guide is aligned with FBR rules and practices relevant to income tax return filing for the tax year 2025–26. These rules are enforced during annual return filing via the FBR IRIS portal.
Purpose of Declaring a Gift on a Tax Return
- To justify the increase in wealth in the recipient’s Wealth Statement
- avoiding penalties, fines, or rejection during an audit
- To keep your tax record clean and transparent
Step-by-Step: How to Give a Gift (Legally + FBR-Compliant)
Step 1: Use Documented Mode (Bank Transfer) to comply with FBR standards:
Preferred Method to Transfer the gift via:
- Bank transfer (online/mobile banking)
- Crossed cheque
- Pay order
Note: Avoid giving large amounts of cash in hand without proof—it may be treated as unexplained income.
Step 2: Create a Simple Gift Declaration Letter
You should create a gift deed. This is especially important for gifts of cash or property. A gift deed must include:
- Donor and recipient names with CNIC
- Relationship (father, son, sibling, etc.)
- Type and value of gift
- Date and method of transfer
- Signatures of both parties
Step 3: Declare in the FBR IRIS System (Both Donor and Recipient)
For the Recipient (who receives the gift):
Go to: Income > Other Sources > Gift
Enter the amount, donor’s CNIC, and relationship, also declare in: Wealth Statement > Increase in Assets
For the Donor (who gives the gift):
Go to: Wealth Statement > Reduction in Assets
Choose the asset you gifted (e.g., cash, property)
Record the value and reason (“gift to son”, “gift to spouse”, etc.)
Here is a sample gift Deed:
GIFT DECLARATION
I, Mr. Muhammad Yousaf (CNIC: 12345-1234567-1), have gifted an amount of Rs. 500,000 to my daughter Miss Sara Yousaf (CNIC: 12345-7654321-2) via bank transfer on 15th June 2025. This gift is made out of love and affection without any consideration.
Signed:
Name
Date: 15th June 2025
Attach: proof of bank transfer screenshot or statement.
Special Case: Gift of Property (Plot, Land, House)
If you are gifting property:
- Prepare a Registered Gift Deed through a legal advisor.
- Submit to the sub-registrar office under the Transfer of Property Act.
- Ensure the property title mutation is updated with the name of the recipient.
- Pay any applicable stamp duty, even though gift deeds are often exempt from CGT (Capital Gains Tax) between family members.
Tax Benefits and Considerations
Gifts from close blood relatives (parents, siblings, spouse, children) are exempt from income tax if declared properly.
FBR may disallow a gift if it is:
- From a stranger
- Unverifiable (no record)
- Not declared in IRIS
What Happens If You Do Not Declare Gifts?
| Risk | Explanation |
|---|---|
| Treated as “unexplained income” | FBR may add it to your taxable income |
| Wealth Statement mismatch | Can trigger audit or notice |
| Disqualification from ATL | Can trigger an audit or notice |
Summary of Do’s and Don’ts
Do:
- Use a bank transfer or a cheque
- Declare in IRIS (both giver and receiver)
- Prepare a written gift statement
- Keep supporting documents (bank slips, gift deed, etc.)
Don’t:
- Give large gifts in cash without documentation
- Receive gifts from unrelated or unknown persons without justification
- Skip the declaration on the tax return
Giving gifts is allowed and respected under Pakistani law and tax regulations. But to protect yourself from audits, fines, or wealth mismatches, it’s essential to document and declare every gift properly.
For the Tax Year 2025–26, FBR is more active in verifying assets, so being transparent now can save you from serious issues later.
I have also prepared a sample gift deed that you can download here and use accordingly.
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