Post Reply 
 
Thread Rating:
  • 0 Vote(s) - 0 Average
  • 1
  • 2
  • 3
  • 4
  • 5
FBR Plans Crackdown Against Cash Transactions In Real Estate
09-20-2023, 07:28 PM
Post: #1
FBR Plans Crackdown Against Cash Transactions In Real Estate
FBR Plans Crackdown Against Cash Transactions In Real Estate

LAHORE: In another attempt to shore up tax collection and monitor money trails in the vastly untapped real estate sector, the Federal Board of Revenue (FBR) is taking steps to address the widespread use of cash transactions. Senior FBR officials have revealed their intention to implement strict penalties and improved monitoring measures to ensure compliance with these regulations.

Back in 2019, an amendment, Section 75A, was introduced into the Income Tax Ordinance, 2001. This amendment stipulates that no individual should acquire immovable property with a fair market value exceeding Rs. 5,000,000, or any other asset valued at more than Rs. 1,000,000, except through the use of a crossed cheque issued by a bank, a crossed demand draft, a crossed pay order, or any other crossed banking instrument that substantiates the transfer of funds between bank accounts.

In addition to their earlier information, they also informed that the fair market value of immovable property will be determined either by the Board, as specified in subsection (4) of section 68, or by the provincial authority for stamp duty purposes – whichever amount is higher.

However, if the transaction doesn’t adhere to the specific banking methods outlined earlier, there are significant implications: Firstly, individuals engaging in such transactions won’t be eligible to claim deduction. This means that deductions related to aspects like depreciation, initial allowance, intangibles, and pre-commencement expenditure will not be permitted for assets purchased outside of the specified banking channels.

Secondly, any cash amount used for a purchase that should have been conducted through the prescribed banking channels, as mentioned previously, will not be considered as a cost when calculating any gains resulting from selling such an asset, as per the stipulations of section 76.

Additionally, if someone buys real estate worth more than five million rupees using cash or a bearer cheque, they’ll be subject to a penalty equal to 5% of the property’s value. This value will be determined either by the Board, as specified in subsection (4) of section 68, or by the provincial authority for stamp duty purposes, depending on which one is higher.

The official also explained by giving example that if a person wants to buy a house worth 6 million Rupees. Instead of following the rule in Section 75A, the person decides to pay the seller in cash. In this case, the said person is violating Section 75A because he or she’s purchasing an immovable property worth more than 5 million Rupees using cash, which is not allowed under the law.

The official also added that it’s a common practice for many of us to disregard these rules. This is because there are numerous property dealers involved in buying and selling properties who are neither registered nor fully aware of the laws. On the other hand, there is a prevailing preference among people for cash purchases in real estate, especially for properties that cost less than ten million.

“Discussions have taken place within the board on several occasions regarding the need to penalize those engaging in such transactions. Now, a plan is being implemented in which property transactions in areas notified by the FBR will be closely monitored, and those who violate the rules will face penalties,” he concluded.

Ref:
https://profit.pakistantoday.com.pk/2023...al-estate/
Visit this user's website Find all posts by this user
Quote this message in a reply
Post Reply 


Possibly Related Threads...
Thread: Author Replies: Views: Last Post
  FBR Mandates Monthly Property Transfer Statements for Immovable Property Transactions LRE-Azan 0 451 12-30-2023 05:32 PM
Last Post: LRE-Azan
  Collaborative Crackdown Launched Against Criminal Activities in Unlawful Residential LRE-Azan 0 525 09-22-2023 12:54 PM
Last Post: LRE-Azan
  LDA Demolishes 35 Illegal Properties in a Major Crackdown LRE-Azan 0 596 09-11-2023 01:11 PM
Last Post: LRE-Azan
  Ravi Urban Development Authority (RUDA) - Cash & Installment Files | Best Opportunity LRE-Azan 0 735 05-20-2023 04:23 PM
Last Post: LRE-Azan
  Property transactions generate PKR 81 billion in revenue Federal Board of Revenue LRE-Azan 0 977 01-24-2023 03:22 PM
Last Post: LRE-Azan
  Lahore Development Authority (LDA) Launches Major Crackdown on Illegal Commercial Act LRE-Azan 0 1,086 01-20-2023 06:15 PM
Last Post: LRE-Azan
  Crackdown Against Encroachments – State’s Land Of Worth Rs. 1.5 billion Recovered Salman 0 4,711 02-28-2014 01:40 PM
Last Post: Salman
  Lahore : Crackdown – 146 Shops Demolished Salman 0 4,537 02-19-2014 04:38 PM
Last Post: Salman
  Preparation Of Crackdown On Land Mafia, Complete Salman 0 6,443 07-25-2013 12:36 PM
Last Post: Salman
  LDA crackdown against commercial use of residential plots Salman 0 7,396 07-04-2013 02:24 PM
Last Post: Salman
  ETPB-DHA land deal: No cash involved, claims Hashmi Salman 0 5,239 06-27-2013 02:26 PM
Last Post: Salman
  Cash-strapped CDA wants private investors Salman 0 4,034 05-29-2013 11:46 AM
Last Post: Salman
  Shahbaz orders crackdown on land mafia Salman 0 4,421 01-30-2013 03:49 PM
Last Post: Salman
  Rs1 billion approved for cash-starved CDA Salman 0 4,181 10-15-2012 01:35 PM
Last Post: Salman
  CDA’s plans to nowhere Salman 0 3,546 08-01-2012 12:35 PM
Last Post: Salman
  Cash-starved CDA seeks lost club to make money Salman 0 5,124 07-27-2012 11:55 AM
Last Post: Salman
  LDA ready to crackdown on illegal land encroachments Salman 0 4,710 04-12-2012 01:20 PM
Last Post: Salman
  METRO Cash & Carry holds fashion show Lahore_Real_Estate 0 4,558 06-06-2011 02:39 PM
Last Post: Lahore_Real_Estate
  CrackDown Against Property Tax Defaulters LRE 0 3,170 11-19-2010 02:48 AM
Last Post: LRE
  Stamp duty on land transactions: real estate business in Sindh shrinking sharply Lahore_Real_Estate 0 8,411 07-19-2010 01:03 PM
Last Post: Lahore_Real_Estate

Forum Jump:


User(s) browsing this thread: 1 Guest(s)