Banking payment must for asset purchase

Banking payment must for asset purchase

Section 75A of Income Tax Ordinance, 2001 makes it mandatory for buyers and sellers of assets to make transactions through banking channel.

The Federal Board of Revenue (FBR) issued the Income Tax Ordinance, 2001 updated up to June 30, 2021. The Ordinance incorporated amendments brought through Finance Act, 2021.

Following is the text of Section 75A of the Income Tax Ordinance, 2001:

75A. Purchase of assets through banking channel.- (1) Notwithstanding anything contained in any other law, for the time being in force, no person shall purchase-

(a) immovable property having fair market value greater than five million Rupees; or

(b) any other asset having fair market value more than one million Rupees,

otherwise than by a crossed cheque drawn on a bank or through crossed demand draft or crossed pay order or any other crossed banking instrument showing transfer of amount from one bank account to another bank account.

(2) For the purposes of this section in case of immovable property, fair market value means value notified by the Board under sub-section (4) of section 68 or value fixed by the provincial authority for the purposes of stamp duty, whichever is higher.

(3) In case the transaction is not undertaken in the manner specified in sub-section (1), –

(a) such asset shall not be eligible for any allowance under sections 22, 23, 24 and 25 of this Ordinance; and

(b) such amount shall not be treated as cost in terms of section 76 of this Ordinance for computation of any gain on sale of such asset.

(Disclaimer: The text of above section is only for information. Team makes all efforts to provide the correct version of the text. However, the team is not responsible for any error or omission.)