FBR Plans to Penalize on Cash Payments in the Real Estate Sector
According to the latest news, the Federal Board of Revenue (FBR) has plans to impose penalties on cash payments in sales/purchases of the real estate sector. As per the officials, this step is taken to boost the tax collection from this sector. This news was shared on the official website of FBR as well as in the newspapers. The officials of FBR also emphasized the widespread use of cash transactions for the purchase of properties, which affects the tax collection.
Recently, the Federal Board of Revenue has announced to imposition of heavy penalties on the real estate sector. An official stated, that the institution is taking necessary steps to stop cash transactions for larger properties. Furthermore, a special monitoring cell has been established which will look out for this matter.
Read Also: FBR Increases Property Tax Rate In Punjab.
In the past, FBR introduced a tax section into the Income Tax Ordinance of 2001, this section was named 75A. According to this amendment, the general public was not allowed to purchase a real estate asset with a fair market value between PKR 5,000,000 and PKR 1,000,000 in cash transactions. Instead, buyers had to use any form of transaction that involved bank receipts such as crossed cheques, demand drafts, pay orders, or any other transaction that involved receipts.
Furthermore, the fair market value will be determined by FBR according to subsection 4 of section 68. Furthermore, the value can also be determined by the provincial authority for stamp duties. Whichever value is higher, will be considered as the fair market price of a real estate asset.
Furthermore, the officials of FBR also announced, that people who do not follow the above-mentioned guidelines will be subject to severe consequences and penalties. People who purchase properties of more than 5,000,000 with cash transactions will be subject to heavy fines, a 5% penalty of the total asset value will be implemented on people who use cash transactions.
It is important to mention that property buyers and investors stay put to these new regulations and conduct purchases as per the criteria provided by FBR to avoid consequences and penalties.
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