ICT clarifies news items

ISLAMABAD: This is apropos two news items published in The News (dated 6th June, 2021 and 7th June, 2021) and headlined “ICT devalues prime real estate by Rs4.5 tr” and “Property valuation: Revision in DC rates in ICT to cost public kitty Rs30 billion” respectively. Both these news are devoid of any facts at best and are driven from mala fide intention at worst. The ground reality is as follows:

The valuation table of the land in Islamabad is for the first time notified by the District Administration on 15-01-2020, with the aim to streamline the rates of the real estate and to increase the tax collection that had been evaded since ages. Prior to the notification of the valuation table, people used to undervalue the rate of the land in the sale deed with the purpose to evade the tax. However, this illegal practice is countered by introducing the valuation table of the land in Islamabad.

Soon after the introduction of the valuation table of land, people started challenging it by filing writs in the Honorable High Court Islamabad, as well as by applications before relevant offices of ICT administration.

There was a need to rationalize this table according to market values and not to escalate and jack up the market rates. Hence, the high court in various judgments referred the cases back to the district administration with the directions to decide the application as per law. Moreover, National Assembly's Standing Committee on Interior also issued directions to cancel the previous notifications and issue a fresh one after completing all legal/codal formalities.

Consequently, Revenue Officers conducted a thorough market survey and put up the rates of the land afresh to further streamline the valuation table. After a thorough exercise by the revenue field staff, rationalised rates were notified. After giving detailed opportunity of hearing to the applicant and obtaining reports from the revenue field staff and Revenue Officers, the court passed an order adjusting the valuation rate of the land at a level so that neither tax could be evaded nor economic activity of sale purchase of land could be stalled.

This is for the first time that the valuation table is being introduced in Islamabad and prior to 2020, it had never been applied (in rural areas). This step will enhance tax net but subject to principles of inclusiveness and judiciousness. In Punjab, these rates have been imposed for three decades, whereas in Islamabad these were imposed just a year ago. Furthermore, the rates notified in the valuation table are not the maximum rates of the land. They are indeed the minimum rates. People can sell their property above this rate but not below it. Rather, on the one hand, it safeguards the state interest by fixing the minimum rate, and on the other, it facilitates the public to carry out their economic activity by rationalizing the rates.

District administration has to revise and increase it after every financial year once they are fixed. Hence, it would keep on increasing every year in accordance with property prices. The purpose of valuation table is to first bring the public into the tax net. Once it is achieved, the rates keep on rationalizing with the passage of time ultimately bringing it to most realistic level. This basically is a meta process.

Interestingly, only one applicant in the entire Islamabad, is asking to increase the rates of the land of the valuation table and specially in one specific Mauza (Revenue Estate) i.e. “Sangjani”. On the surface, it appears as if that applicant is saying it solely for the State’s interest, but in reality there is a deep self-interest of that applicant in it. Land acquisition is likely to be done in this area for construction of road and local family, who are seeking higher payments have an interest in enhancement of the rates for personal gains. Thus, the applicant, just for his personal interest, is challenging the entire revision of the rates of the valuation table. The explanation that reviewed CDA by-laws may accrue prospective benefit to them in unfounded. Under the law, the valuation is on “as is where is” basis and not on “what may happen”. Cultivated land is not valued same as non cultivable land or barren land. There is documented record available with district administration to prove that this line of argument being presented by the landowners adjacent to GT Road apparently to jack up prices under the guise of raising tax revenue just to extract higher valuation of their lands and benefit at expense of government resource that runs into several billions. However, revenue department has resisted this pressure on merits.

It is also important to mention that the adjoining Revenue Estates to those Mauzas falling near GT Road, whose valuation rates are notified by the neighboring district Rawalpindi, is still less than that of the Islamabad. Any aggrieved person has a right to contest so called DC Rates, before available legal forums.

The valuation rates earlier notified on 15.01.2020 had a strong negative impact on the economic activity in real estate. The total number of registered sale deeds have drastically decreased from 26,868 in the year 2019 to 17,226 in the year 2020. Similarly, the numbers of Oral Land Mutations (Intiqaal Zubani) also dropped from 43,265 in the year 2019 to 22,104 in the year 2020. This clearly shows that the inflated rates of previous valuation table discouraged the economic activity in the real estate. Due to such inflated valuation rates, people started adopting other option of transferring their land and that too without paying a single penny of tax to the government exchequer. That method is of “Power of Attorney” on which no tax is being imposed in Islamabad. Interestingly, the numbers of “Power of Attorney” increased from 4,381 in the year 2019 to 6,782 in the year 2020. Hence, due to exaggerated rates of the valuation table, the registered sale deeds and Oral Land Mutations have decreased and that of the “Power of Attorney” increased, and this gap would have kept on increasing in the future discouraging the economic activity and narrowing down the tax base even further. One small example will clarify the entire confusion. Revenue Estate Badana Khurd is adjoining to Revenue Estate Sangjani. The rate of valuation table for Badana Khurd is being fixed by Rawalpindi. The valuation rate of Khasra Number 530 of Sangjani was fixed at 2.5 million per marla. Whereas the rate of similar kind of adjacent land of khasra number 334 in Revenue Estate Badana Khurd which is just at a distance of 150 meters fixed by District Rawalpindi is 25,000 per marla only. This shows how grave the discrepancies existed in the valuation rate of Islamabad.

The data mentioned in The News articles namely, “ICT devalues prime real estate by Rs 4.5 tr” and “Property valuation: Revision in DC rates in ICT to cost public kitty Rs30 billion” dated June 6, 2021, and June 7, 2020 respectively, is totally fudged and appears to be sponsored by a party having deep self-interest. The term Rs4.5 trillion is being used to misguide the public as if a huge loss is being done to the state’s exchequer. Basically, he has given a fictitious number of the worth of land in Islamabad that he thinks is being devalued which even Revenue staff would take weeks to ascertain even after having access to the revenue record.

On the very next day, in the other article, another fake and fudged data of loss of Rs30 billion to the state exchequer in a period of one month due to devaluation is being shared. How is it possible to cause a loss of Rs30 billion in a month when the total collection for the entire year of 2020 is Rs1.7 billion? Even if the rate of valuation table is devalued to zero, still the loss for the entire year would be not more than Rs1.7 billion. Whereas only one party in the entire Islamabad that is insisting to increase the rates as per its wish is aiming to reap an advantage of Rs5 billion in a single acquisition case. The article has stated that top official of FBR has conceded that this devaluation has caused a loss of Rs30 billion. When matter was taken up with FBR, it totally negated and declared it fake and fictitious. Hence, the entire news reports are based on wrong figures with an aim to financially benefit a single strong private party at the expense of the general public and state’s exchequer.

Mehtab Haider adds: This scribe had written the stories on the basis of official records and documents submitted to the FBR. Now there is a need to further probe why valuation rates were reduced instead of increasing it because it is going to cause multi-billion rupees losses to the national exchequer. This scribe quoted the findings of World Bank loan of $400 million under the Pakistan Raises Revenues whereby the government agreed with the WB to jack up valuation rates to bring it at par with the market rate. Now the official investigators must determine facts to avoid loss to the national exchequer. This scribe stands by his story.