The Federal Board of Revenue (FBR) is set to introduce penalties for cash transactions. It will help regulate and enhance tax collection in the real estate sector.
The move by the FBR aims to address the widespread use of cash in real estate dealings and boost transparency. A senior FBR official shared insights into the Board’s plans. Emphasizing the need for improved monitoring measures and strict penalties to curb cash transactions.
The initiative traces back to 2019 when an amendment, known as Section 75A, was incorporated into the Income Tax Ordinance of 2001. This amendment prohibits individuals from conducting property transactions exceeding a fair market value of Rs. 5,000,000 or any other asset valued at over Rs. 1,000,000 using cash payments.
Instead, prescribed banking instruments, such as crossed cheques issued by banks, crossed demand drafts, crossed pay orders, or other endorsed banking instruments, must be utilized to substantiate legitimate fund transfers between bank accounts.
Moreover, the Board will determine the fair market value of immovable property, as specified in subsection (4) of section 68. Or by the provincial authority for stamp duty purposes, depending on which amount is higher.