Imagine buying a shiny piece of gold worth over a million Rupees with cash, thinking you’ve scored a great deal—only to find out later that this simple choice could cost you a fortune in taxes. That’s the reality under Section 75A of Pakistan’s Income Tax Ordinance. This law says no to cash for big-ticket items like gold or property over PKR 1 million, pushing you to use a bank transfer or cross-cheque instead.
Slip up, and the Federal Board of Revenue (FBR) could hit you hard by wiping out your purchase cost when you sell, leaving you with a tax bill that’ll make your head spin. Let’s unpack this rule, see how it works in real life, and figure out how to keep your hard-earned money safe.
What’s Section 75A All About?
Picture this: you’re at a gold shop, haggling over a beautiful necklace worth PKR 2 million. You pull out a stack of cash, pay, and walk away happy. Sounds normal, right? Not anymore. Section 75A is here to change the game. It’s a rule in Pakistan’s tax law that says if you’re buying anything—gold, a car, a plot of land—worth more than PKR 1 million, cash is off the table. You’ve got to use a cross-cheque or send the money online through your bank. Why? The government wants every big purchase tracked, cutting down on shady deals and making sure taxes get paid.
But here’s the kicker: if you ignore this and use cash anyway, the FBR can make you regret it later. When you sell that asset, they might pretend you got it for free, taxing every penny you make on the sale. It’s not just a slap on the wrist—it’s a punch to your bank account.
What You Need to Know About Section 75A
1. Cash? No Thanks!
The heart of Section 75A is simple: no cash for purchases over PKR 1 million. Whether it’s a gold bar or a fancy watch, you’ve got to pay through the bank. It’s not just a suggestion—it’s the law. Break it, and you’re setting yourself up for trouble down the road.
2. Selling Later? Here’s Where It Hurts
Let’s say you buy something pricey in cash and sell it later for a profit. Normally, you’d pay tax on the difference between what you paid and what you sold it for—your “capital gain.” Under Section 37, that tax depends on your income level. But if you paid cash for that initial purchase and it’s over PKR 1 million, the FBR can step in and say, “Nope, we don’t count what you paid.” Suddenly, they tax you on the whole sale amount, not just your profit.
Here’s a story to bring it home:
- The Gold Deal: On March 31, 2025, you buy gold for PKR 2 million in cash because that’s how things are done in your circle. By December 31, 2025, gold prices jump, and you sell it for PKR 3 million. You figure your profit is PKR 1 million, and with a tax rate of 5% on part of it, you owe PKR 20,000. Easy, right?
- The Cash Trap: But the FBR checks your tax return (filed September 30, 2025) and sees the cash payment. They throw out your PKR 2 million cost, saying it doesn’t count because you broke Section 75A. Now, they tax you on the full PKR 3 million. Depending on your income bracket—say, 30% on amounts over PKR 1.6 million—you’re looking at PKR 400,000–500,000 in taxes. That’s a jump from PKR 20,000 to half a million, all because you paid in cash.
if you want to read more about , how much tax will deducted on the gold sale check our detailed article Heavy Taxes on Gold Gains in Pakistan? Here’s What You Should Know.
3. The FBR’s Eagle Eye
The FBR isn’t messing around. They dig into tax returns, especially when you report a big sale. If something smells fishy—like a cash purchase over PKR 1 million—they’ll send you a notice and start asking questions. “How’d you pay for this?” they’ll say. If the answer’s cash, they’ve got you.
4. The Big Penalty: Your Cost Gets Erased
The worst part? If you paid cash for something over PKR 1 million, the FBR can act like you never spent a dime. In our gold example, they’d ignore your PKR 2 million purchase cost, leaving you to pay tax on the entire PKR 3 million you got from selling it. It’s like they’re saying, “You broke the rules, so we’re taking it all.”
5. Knowledge Is Power
Here’s the sad truth: a lot of folks don’t even know about Section 75A. You might have the money, the receipts, everything legit—except you didn’t know cash was a no-go. No one told you, and you didn’t ask. Next thing you know, you’re stuck with a penalty you could’ve avoided. That’s why getting clued in is so important.
A Real-Life Lesson: The Gold That Cost Too Much
Let’s put ourselves in your shoes. You’re a regular person—maybe a small trader or just someone who likes investing in gold. On March 31, 2025, you spot a deal: PKR 2 million for some gold, paid in cash because that’s how your uncle always did it. Fast forward to December 31, 2025—you sell it for PKR 3 million, thrilled with your PKR 1 million profit. You file your taxes, expecting a tiny bill.
Then the FBR knocks. They see the cash payment and say, “Sorry, that PKR 2 million doesn’t count.” Your profit isn’t PKR 1 million anymore—it’s PKR 3 million in their eyes. Instead of a PKR 20,000 tax, you’re hit with PKR 400,000 or more. Your celebration turns into a headache, all because of one decision.
What You Should Take Away
- Cash Is Out: Anything over PKR 1 million—gold, cars, whatever—can’t be bought with cash.
- Bank It: Stick to cross-cheques or online transfers. It’s safer and smarter.
- Cost Matters: Pay wrong, and your original cost could vanish from the tax equation.
- Taxes Can Explode: A small mistake could mean a huge bill later.
- Keep Proof: Save bank records to show the FBR you played by the rules.
- Stay Sharp: Knowing this stuff keeps your money where it belongs—in your pocket.
Who Needs to Care and What to Do
If You’re an Individual
- Think twice before pulling out cash for big buys. Over PKR 1 million? Hit the bank instead.
- Hang onto every receipt and bank statement. They’re your shield if the FBR comes calling.
- Chat with a tax pro before you spend big—it’s worth it.
If You Run a Business (Like a Gold Shop)
- Tell your customers cash won’t fly for deals over PKR 1 million. They’ll thank you later.
- Set up your shop to only take bank payments for big sales. It’s good for you and them.
- Keep your books tight—every transaction, every cheque, logged and ready.
If You’re a Financial Advisor
- Be the hero your clients need. Warn them about Section 75A before they mess up.
- Push them toward bank payments and show them how it saves money in the long run.
- Help them plan smart so taxes don’t eat their profits.
Why You Can’t Ignore Section 75A
This isn’t just some fine you can shrug off. It’s a trap that can drain your savings or kill your business’s bottom line. Paying cash might feel easy now, but when the FBR catches up, it’s anything but. They’re watching closer than ever, and “I didn’t know” won’t cut it. Whether you’re buying gold to stash away or selling goods for a living, following this rule is your ticket to peace of mind.
Wrapping It Up
Section 75A is shaking things up in Pakistan. It’s forcing us to ditch cash for big purchases and get comfortable with bank payments—all to keep things above board. But it’s also a wake-up call: mess up, and you’ll pay dearly. Don’t let a quick cash deal turn into a tax nightmare. Learn the rules, talk to someone who knows them, and keep your transactions clean.
Got a question about Section 75A? Maybe a story of your own? Drop it below—let’s figure this out together!
