ISLAMABAD: The Federal Board of Revenue (FBR) Tuesday decided to revise the rates for the valuation of immovable property in major urban centres and adjacent areas to bring it on the same level as 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% of market rates so upward revision will help the FBR to bring it in line with the prevailing market rates
For the valuation of immovable property, there are currently three different rates. One of the rates exists on the ground, then there are the DC rates and then, the FBR’s notified rates.
While analysing valuation tales for Islamabad, the Regional Tax Officer (RTO) Islamabad must take into account the fact that the DC rates were increased rather than slashed the last time.
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 the 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 the respective RTOs to specify areas, if any, not covered under FBR notifications.
The FBR has directed its officers to point out any problems or anomalies in the valuation tables. The rates of immovable property will be revised and if any anomalies are left in the tables, the RTO will be held responsible for it.
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 the respective commissioners did not have full knowledge of the market value of different housing societies.
Sources told The News that the FBR had devised a system through which valuation rates would be increased. This would ensure more amount of tax is collected by the Bureau.
It is also an open secret that there is a huge amount of black money parked in real estate. There are three different rates through which real estate can be valuated– the 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.