FBR to review above-market real estate valuation cases

KARACHI: Federal Board of Revenue (FBR) would review instances of valuation of immovable property exceeding the market rates in consultation with the stakeholders, an official said on Saturday.

“The recently notified property valuation by the FBR was finalised through a consultative process by the field formations [officials],” said Asad Tahir Jappa, an FBR spokesperson.

The FBR has jacked up the valuation rates of immovable properties for 40 major cities depending upon location and commercial areas within the cities.

“However, if there are some instances of [property] valuation beyond the market price, the same will be reviewed in consultation with the stakeholders,” he added.

Jappa said there were some stakeholders who had informed FBR that new valuation of property, in some cases, had surpassed the existing market price.

“Our field formations will sit with the stakeholders and in genuine cases, the Federal Board of Revenue will review the valuation,” said the FBR official adding, “But it will be on a case-to-case basis”.

In 2019, the FBR had jacked up the valuation rates of property by 30 to 85 percent but this time the unprecedented increase became effective from December 1, 2021.

As a result, according to real estate agents, the rates went up 100 to over 600 percent in one go.

The purpose of increasing the property valuation was to increase tax revenue and more importantly document the economy as part of the FBR’s drive to bring more and more people under the tax net.

FBR’s property valuation for different areas has mostly been below their market price.

When a property is sold, only a fraction of the property is liable to be taxed because of the low property valuation set by Federal Board of Revenue .

This discrepancy of transactions, according to experts, is one of the reasons for international financial agencies, especially the FATF (Financial Action Task Force), going hard on Pakistan.