FBR to revise rates upward for valuation of properties

ISLAMABAD: The Federal Board of Revenue (FBR) has decided to revise rates for valuation of immovable properties in all major urban centers and adjacent areas to bring it on a par with the market price.

In an official communication to Chief Commissioners Regional Taxpayers Offices (RTOs) across the country, the officers have been directed for valuation tables of immovable property under sub-section (4) of section 68 of the Income Tax Ordinance 2001. The FBR’s existing valuation table is close to 60 to 70 percent of market rates so upward revision will help the FBR to bring it in line with the prevailing market rates.

At the moment, there are three different rates --- one exists on the ground, second the DC rates, and third the FBR’s notified rates.

There are instances where the DC rates in Islamabad Capital Territory (ICT) were slashed down instead of jacking them up so now the Islamabad RTO must analyse this aspect while revising valuation tables in different respective areas in ICT.

The FBR’s headquarters has given a deadline for providing updated valuation tables after necessary approval by the committee headed by the Chief Commissioners Inland Revenues latest by Wednesday (today).

It was conveyed after a zoom meeting by early this month that updated valuation tables would be shared with the board for issuance of Statutory Regulatory Order (SRO). The existing SRO may be examined for this purpose.

Moreover, it was also conveyed to respective RTOs to specify areas, if any, not covered under FBR notifications.

The FBR officers were directed to point out anomalies, if any, in the existing valuation tables. The rates for valuation of immovable property shall be revised and the RTO concerned shall be responsible for any anomalies left unchecked.

When contacted, Real Estate Consultant Association’s General Secretary Ahsan Malik said Tuesday that the FBR should include representatives of real estate agents in committees in their respective cities to have their input while revising valuation tables. He said that the respective commissioners did not have full knowledge of the market value of different housing societies.

Sources said that the FBR had devised a strategy to jack up the rates of valuation tables so that the tax collection could increase. It is an open secret that the maximum amount of black money is parked in real estate. There are three types of valuation of real estate -- DC rate, which is used for stamp duty purposes and at this rate property is registered with Property Registration Authorities, FBR rate at which withholding tax is charged according to filer or non-filer status and FBR requires an explanation of sources at least to the extent of this valuation and actual market rate, which is usually five to 10 times higher than the DC rate and two to four times of FBR rate.

Pakistan may be the only country to have three types of property valuation. Since a property can be registered and owned at a value much lower than the market rate, it results in the parking of maximum wealth in this sector. Even people who do not have much know-how of business feel it easy and safe to make an investment in real estate as this investment is usually easy, safe, and results in substantial profits.