Section 75A FBR Explained: Can You Pay Cash for Property in Pakistan?
No. Under Section 75A of the Income Tax Ordinance, cash payments are NOT allowed when buying immovable property above PKR 5 million. Payment must be made through banking channels only.
What Is Section 75A of the Income Tax Ordinance?
Section 75A, introduced by the FBR, makes it mandatory to use a banking channel when purchasing assets — particularly immovable property — above a certain value.
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Applies to property buyers only.
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Does not apply to sellers
Applies if fair market value exceeds PKR 5,000,000.
Can I Buy Property with Cash in Pakistan?
No, if the fair market value of the property is more than 5 million PKR, you cannot pay in cash. You must use:
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Bank transfer (IBFT)
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Pay order
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Cross cheque
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Any verifiable banking channel
Even partial payment in cash for properties above 5 million is a violation of Section 75A.
What Happens If I Pay in Cash?
If you violate this rule:
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The FBR will treat your purchase price as zero when calculating Capital Gain Tax (CGT).
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When you later sell the property, the entire sale value is treated as profit
Example:
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You buy a plot for PKR 7 million (in cash).
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Later, you sell it for PKR 8 million.
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Normally, CGT would be charged on 1 million profit.
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But since you paid in cash, FBR assumes purchase price = 0.
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So, CGT is charged on full 8 million → 15% of 8 million = PKR 1.2 million (instead of just 150k).
Does Section 75A Apply to the Seller?
No. Sellers are not restricted.
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A seller can legally receive payment in cash.
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The law clearly says: “No person shall purchase an asset above 5 million PKR other than by a crossed cheque or banking instrument.”
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It does not restrict the seller from accepting cash.
Why This Law? FBR’s Tax Collection Strategy
The FBR’s primary goal is revenue security.
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They don’t lose tax on the buyer’s purchase.
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But they do lose tax if Capital Gain Tax (CGT) is evaded during the sale.
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By penalizing cash buyers, FBR ensures:
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Higher CGT recovery later.
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Buyers stay compliant from the start.
Buyer vs. Seller: How Transactions Actually Happen
🔵 Seller’s Side:
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May prefer cash.
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Might want to show lower official sale value to reduce tax.
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No legal restriction from Section 75A on them.
🟢 Buyer’s Side:
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If buyer is a filer:
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Will want to pay via banking channels to protect their CGT in the future.
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If buyer is a non-filer:
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Might prefer to pay part cash, part bank.
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Risk: Will face full CGT later if caught.
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Tip: Buyers should never compromise. Paying cash to please the seller can cost you millions in penalties.
📝 Key Takeaways – Section 75A FBR Rules in Pakistan
| Topic | Rule |
|---|---|
| Applies To | Property Buyers Only |
| Minimum Limit | Over PKR 5,000,000 Fair Market Value |
| Cash Allowed? | ❌ No |
| Required Method | ✅ Bank Transfer / Pay Order / Cross Cheque |
| Penalty | CGT on Full Sale Value |
| Sellers Restricted? | ❌ No |
Frequently Asked Questions (FAQs)
1. Can I receive cash when selling my house?
Yes. The restriction is on the buyer, not the seller.
2. What if I understate my purchase price using DC rate?
If caught, FBR may treat the actual payment made in cash as invalid. This can nullify your cost basis, increasing your CGT.
3. Does Section 75A apply to inherited or gifted property?
No. It applies only to purchases. Inheritance and gifts are covered under separate sections.
Final Advice for Buyers and Investors
If you're buying property in Pakistan worth more than PKR 5 million:
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Use banking channels only.
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Avoid even partial cash payments.
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Always get a documented trail.
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Remember: Compliance now saves you massive CGT later.