If the firm files its return, do the partners still have to file their own returns and wealth statements?

The firm’s return covers the firm only. Each partner is a separate person under the Income Tax Ordinance, 2001, so each one looks at section 114 on their own facts to see whether a return is due. On top of that, the proviso to section 116(2) requires every member of an association of persons (AOP) to give a wealth statement and a wealth reconciliation statement along with the AOP’s return.

What does the law say?

The firm and the partners are separate taxpayers. Section 92(1) makes an AOP liable to tax separately from its members. The firm’s return reports the firm’s income, not the partners’ personal income or assets.

Who must file a return: section 114. Section 114(1) lists the persons who must furnish a return for a tax year. The main ones for a partner are:

• Clause (ab): every person other than a company whose taxable income for the year exceeds the maximum amount not chargeable to tax.
• Clause (ae): every person whose income for the year is subject to final taxation under any provision of the Ordinance.
• Clause (b): any other person who, among other things, has been charged to tax for either of the two preceding tax years, claims a loss carried forward, owns immovable property of 500 square yards or more or a flat of 2,000 square feet or more in a rating area, owns a motor vehicle above 1000 CC, has obtained a National Tax Number, holds a commercial or industrial electricity connection with an annual bill over Rs. 500,000, or is a resident person registered with a chamber of commerce, trade body, market committee or professional body.

Section 114(2)(e) says a return shall be accompanied by a wealth statement as required under section 116.

Wealth statements: section 116(2). Every resident taxpayer being an individual who files a return must furnish a wealth statement and a wealth reconciliation statement with it. The proviso then adds that every member of an association of persons shall also furnish a wealth statement and wealth reconciliation statement for the year along with the return of income of the association.

How does it work in practice?

There are two separate questions for each partner.

1. Must I file my own return? Section 9 defines taxable income as total income under clause (a) of section 10, which is income under the heads of income. An exempt AOP share under section 92(1) is not income under a head, so on its own it does not push a partner over the threshold in clause (ab). But many partners meet another trigger: an NTN, a car above 1000 CC, property above the size limits, a chamber of commerce or bar council registration, or other taxable income such as rent. Any one trigger in section 114(1) is enough.

2. Must I give a wealth statement? The section 116(2) proviso attaches the wealth statement to the AOP’s return, and it applies to every member. A partner who files a personal return also attaches a wealth statement to it under the main rule in section 116(2) and section 114(2)(e).

A partner with other taxable income also needs a personal return for a practical reason: section 88 uses the exempt AOP share to set the rate on that other income, and that computation belongs in the partner’s own return.

Worked example (illustrative figures)

A Karachi auto parts firm has three partners and files its return for tax year 2027.

Partner	Facts (made up)	Own return under section 114?	Wealth statement?
Asif	Only income is his exempt firm share; holds an NTN	Yes, clause (b)(vii): he has obtained an NTN	Yes, with his return and under the section 116(2) proviso
Nadia	Exempt firm share plus Rs. 1,800,000 taxable rent	Yes, clause (ab): taxable income above the 0% band	Yes, with her return and under the proviso
Kamran	Exempt share only; none of the clause (b) triggers	Not on these facts, unless a Board notification under section 114(1)(c) covers him	Yes, the proviso to section 116(2) applies to every member

In Nadia’s case section 88 also applies, because she has taxable income and an amount exempt under section 92(1).

What if …?

What if a partner is a company? A company must file under section 114(1)(a) in any case. The main rule in section 116(2) is limited to individuals, while the proviso says “every member” without that limit. The text does not say expressly whether a company member must furnish a wealth statement under the proviso.

What if the Commissioner sends a notice? Section 116(1) lets the Commissioner require any individual to furnish a wealth statement by notice, whatever the filing position.

What if a partner joined partway through the year? Section 116(2) speaks of a wealth statement “for the year”. The section does not set special rules for a member who joined or left during the year.

Common mistakes

• Treating the firm’s return as covering the partners. Section 92(1) keeps the AOP and its members separate.
• Assuming an exempt share means no filing. Section 114(1)(b) triggers such as an NTN or a car above 1000 CC apply regardless of income.
• Leaving the partners’ wealth statements out of the AOP filing. The section 116(2) proviso ties them to the AOP’s return.
• Leaving the AOP share out of the personal computation. Section 88 needs it to set the rate on other income.

What to check in the official text

Read section 114(1) and (2) and section 116(1) and (2) with its proviso in the official PDF, since the site text of section 114 interleaves footnotes with the clauses. Read section 88 if a partner has other taxable income. The IRIS filing steps and the prescribed wealth statement form are not covered here.