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Immovable property purchase above Rs5 million not allowed other than banking channel

Taxation

KARACHI: Any immovable property purchased through cash or bearer instruments will liable to penalty of five percent of the total value of immovable property, sources in Federal Board of Revenue (FBR) said on Saturday.

The sources said that a restriction had been imposed on the purchase of immovable property over Rs5 million through cash or bearer cheque.

They said that any person who purchases immovable property having fair market value greater than rupees five million through cash or bearer cheque then such person shall pay a penalty of five percent of the value of property determined by the FBR under sub-section (4) of section 68 or by the provincial authority for the purpose of stamp duty, whichever is higher.

The sources said that through Finance Act 2019 a Section 75A was inserted to Income Tax Ordinance, 2001, under which purchases of assets had been mandatory through banking channels.

According to the section, 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.

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.

In case the transaction is not undertaken:

(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.

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