CAF-2 · Chapter 9 · Question 13 of 15
Mr. X purchased an open commercial plot having a fair market value of Rs. 12,000,000. He paid Rs. 6,000,000 through a crossed banking instrument and the remaining Rs. 6,000,000 in physical cash. Under Section 75A, what are the tax implications for computing capital gains upon future disposal?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) B) The Rs. 6,000,000 paid in cash shall not be treated as cost, and he must pay a penalty of 5% of the FMV/DC rate.
Explanation
Under Section 75A, purchasing immovable property having a value greater than Rs. 5 million in cash means the cash amount shall not be treated as cost for computing gain on sale, and the person shall pay a penalty of 5% of the FBR value or DC rate (whichever is higher).
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