Karachi, December 1, 2025 – The Federal Board of Revenue (FBR) has announced that it will determine the cost of assets for tax purposes during the tax year 2026, in accordance with the Income Tax Ordinance, 2001. This move is aimed at providing clarity for taxpayers and businesses regarding asset valuation for taxation.
Under Section 76 of the Ordinance, the cost of an asset is broadly defined to include not only the purchase price but also incidental and improvement-related expenditures, while excluding amounts already allowed as deductions under the law. The FBR said these rules will ensure uniformity and transparency in determining taxable asset values.
Key points under Section 76 include:
• Asset Acquisition: The cost includes total consideration, fair market value of any non-cash payment, and incidental expenditures for acquiring or disposing of the asset.
• Asset Improvement: Expenses incurred to alter or enhance the asset are included unless fully deducted earlier.
• Constructed Assets: The total production or construction costs plus incidental expenses are considered part of the asset cost.
• Foreign Currency Loans: Any gain or loss due to currency fluctuations on loans used to acquire an asset will adjust the asset’s cost for depreciation purposes.
• Partial Disposal: When part of an asset is sold, the cost is proportionally allocated based on fair market value at acquisition.
• Exempt or Taxable Amounts: Costs for assets acquired through taxable or exempt amounts are calculated by adding amounts paid to the derived sum.
• Government Assistance: Grants, subsidies, or rebates are generally excluded unless taxable under the Ordinance.
The FBR also reserves the right to issue specific rules for determining asset costs, offering flexibility to address evolving tax requirements. Taxpayers are advised to closely follow FBR notifications to ensure compliance.
This framework is expected to improve transparency in asset valuation, reduce disputes, and streamline tax administration for businesses and individuals across Pakistan.
Disclaimer: The information provided in this article is for general informational purposes only and does not constitute legal or tax advice. Taxpayers should consult the Federal Board of Revenue (FBR) or a qualified tax professional for guidance specific to their circumstances.