Please wait, loading...

 
Office # 102, Nafees Arcade, Opposite Askari Park, University Road, Karachi, Pakistan.

Installment paid against immovable property - K. K. ADVISORS

A person purchase property in July 2019 and paid down payments of Rs. 500,000. Further he has to pay installments of Rs. 100,000 per month (25 installments) starting from August 2019.

A person purchase property in July 2019 and paid down payments of Rs. 500,000. Further he has to pay installments of Rs. 100,000 per month (25 installments) starting from August 2019. Total cost of the property is 3,000,000. How to reflect the above transaction in wealth statement for tax year 2020?

 

Solution:

 

Down payment paid Rs.   500,000
Total installments paid during the year (From Aug 2019 to June 2020) Rs. 1100,000
Total amount paid during the year Rs. 1600,000
Amount remaining Rs. 1400,000

 

In wealth statement, there are two ways to reconcile the above treatments

 

First method:

 

Record full cost of the asset (7002) Rs. 3000,000
Show Liability (7021) Rs. 1400,000
For reconciliation, decrease the bank/cash account of Rs. 1600,000

 

Second method:

 

Only show the amount of assets you have paid till the end of tax year 2020 in the code tab (7002) i.e. Rs. 1600,000 and credit bank or cash for reconciliation

 

Conclusion:

 

Both methods are right in the understandings of tax ordinance but the first method is more preferable and simplistic to reconcile the amount of asset

Leave a Reply

Your email address will not be published. Required fields are marked *

Copyright by KK ADVISORS Design and Developed by THE EXPERTZ SOLUTIONS All rights reserved.