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Tag: cross cheque

  • Purchase of assets made must through banking instruments

    Purchase of assets made must through banking instruments

    KARACHI: Federal Board of Revenue (FBR) has made mandatory purchase of assets of certain amounts through banking instruments, including crossed cheque or crossed pay order.

    FBR sources said that in order to discourage undocumented economy the government had made changes in Income Tax Ordinance, 2001 through Finance Act, 2019.

    A new Section 75A to the Income Tax Ordinance, 2001 has been inserted under which:

    (1) 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 allowace 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.

    The FBR officials 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 Board under sub-section (4) of section 68 or by the provincial authority for the purpose of stamp duty, whichever is higher.

  • Payment for transactions above Rs50,000 must be made through crossed cheque

    Payment for transactions above Rs50,000 must be made through crossed cheque

    KARACHI: Federal Board of Revenue (FBR) has made it mandatory for buyers to make payment above Rs50,000 through crossed cheque or banking instruments ensuring transfer of payment to seller’s account.

    The FBR issued Sales Tax Act, 1990 updated till June 30, 2019 incorporating amendments brought through Finance Act, 2019. Under Section 73 of the Act, the FBR made it mandatory for buyers to make payment for any transaction above Rs50,000 through crossed cheque or through any banking instrument.

    Section 73: Certain transactions not admissible

    Sub-Section (1): Notwithstanding anything contained in this Act or any other law for the time being in force, payment of the amount for a transaction exceeding value of fifty thousand rupees, excluding payment against a utility bill, shall be made by a crossed cheque drawn on a bank or by crossed bank draft or crossed pay order or any other crossed banking instrument showing transfer of the amount of the sales tax invoice in favour of the supplier from the business bank account of the buyer:

    Provided that online transfer of payment from the business account of buyer to the business account of supplier as well as payments through credit card shall be treated as transactions through the banking channel, subject to the condition that such transactions are verifiable from the bank statements of the respective buyer and the supplier.

    Sub-Section (2): The buyer shall not be entitled to claim input tax credit, adjustment or deduction, or refund, repayment or draw-back or zero-rating of tax under this Act if payment for the amount is made otherwise than in the manner prescribed in sub-section (1), provided that payment in case of a transaction on credit is so transferred within one hundred and eighty days of issuance of the tax invoice.

    Sub-Section (3): The amount transferred in terms of this section shall be deposited in the business bank account of the supplier, otherwise the supplier shall not be entitled to claim input tax credit, adjustment or deduction, or refund, repayment or draw-back or zero-rating of tax under this Act.

    Explanation— For the purpose of this section, the term “business bank account” shall mean a bank account utilized by the registered person for business transactions, declared to the Commissioner in whose jurisdiction he is registered 1[through Form STR-1 or change of particulars in registration database.