The Federal Board of Revenue (FBR) on Tuesday (July 23) issued a notification jacking up valuation rate of properties for 20 cities. The valuation rates for residential, commercial, industrial and flats categories were issued at different rates. The FBR high-ups claimed that the valuation rates were jacked up on average from 50 percent to 85 percent.
The 20 cities include Abbottabad, Bahawalpur, Faisalabad, Gujrat, Hyderabad, Islamabad, Jhang, Jhelum, Karachi, Lahore, Mardan, Multan, Peshawar, Quetta, Rawalpindi, Sahiwal, Sargodha, Gujranwala, Sukkur and Gwadar. The notification will come into force with effect from July 24, 2019 (today).
The FBR has divided the Karachi city into eight categories on the basis of residential plots, commercial plots, industrial category and flats category with different rates.For certain areas of Karachi, the rates have been increased up to 75%, mainly for residential apartments.
It is for the second time in six months that the Pakistan Tehreek-e-Insaf (PTI) government increased the property valuation rates. In February this year, the government had also increased the average rate by 20% to 55% of the market value. With the fresh increase, the total average increase in valuation rates has come to 50% in six months, which would significantly increase the tax collection.
“After the fresh increase, the property valuation rates are now around 85% of the fair market value,” said the FBR Member Inland Revenue Policy Dr Hamid Ateeq Sarwar.
The move is expected to generate an additional Rs40 billion in tax revenues in this fiscal year, but it will disappoint real estate agents and traders. The real estate sector remains sluggish due to government’s taxation policies, overall slowdown of the economy and drive to encourage banking transactions. “The FBR will also align the value of immovable properties with market rates and specify conditions under which the long-term lease hold will be considered as the purchase of property,” reads the latest report of the International Monetary Fund (IMF).
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27 September, 2019