Property purchases above Rs5 million and other assets exceeding Rs1 million must be paid for through prescribed banking or digital channels.
ISLAMABAD: The Federal Board of Revenue (FBR) has set mandatory payment thresholds for the purchase of immovable property and other high-value assets through banking channels or digital means for Tax Year 2027.
The FBR has issued the Income Tax Ordinance, 2001, updated up to June 30, 2026, outlining the requirements under Section 75A, which prescribes how certain high-value asset purchases must be paid for.
Property purchases above Rs5 million
Under Section 75A(1), a person cannot purchase immovable property with a fair market value exceeding Rs5 million except through an approved banking or digital payment method.
The payment must be made through one of the following:
• a crossed cheque drawn on a bank;
• a crossed demand draft;
• a crossed pay order;
• another crossed banking instrument; or
• digital means showing the transfer of funds from one bank account to another.
The same requirement applies to the purchase of any other asset with a fair market value exceeding Rs1 million.
The provision therefore establishes separate thresholds for immovable property and other assets, requiring qualifying transactions to be completed through traceable payment channels.
How property value is determined
Section 75A also specifies how the fair market value of immovable property is determined for the purpose of the banking-channel requirement.
The applicable value will be the amount notified by the FBR under Section 68(4) or the value fixed by the relevant provincial authority for stamp-duty purposes, whichever is higher.
This means the higher officially determined value is used when assessing whether a property purchase crosses the statutory threshold.
Tax consequences of non-compliance
The law also sets out tax consequences where an asset is purchased without using the prescribed banking or digital payment method.
Under Section 75A(3), such an asset will not qualify for allowances under Sections 22, 23, 24 and 25 of the Income Tax Ordinance, 2001.
In addition, the amount paid for the asset will not be treated as its cost under Section 76 when calculating any gain arising from its subsequent sale.
The provisions therefore link the relevant tax treatment of qualifying asset purchases to compliance with the prescribed payment mechanism.
Requirements for taxpayers in Tax Year 2027
For Tax Year 2027, taxpayers purchasing high-value property or other assets should ensure that payments exceeding the applicable statutory thresholds are made through a recognised banking channel or qualifying digital transfer.
Maintaining appropriate evidence of the payment method is also important where the transaction may subsequently be relevant for tax allowances, asset costs or the calculation of gains.
The FBR’s provisions under Section 75A are intended to ensure that high-value asset transactions above the prescribed limits are conducted through traceable financial channels for income tax purposes.