Recently, Federal Board of Revenue FBR has issued a notification to further raise the property valuation rates by 30% for almost 20 cities. The government has decided the new upgraded valuation rates for residential, commercial, industrial and flats categories.
FBR has confirmed that the valuation rates will go high from 50 percent to 85 percent under the current notification been released. The rates are increased by FBR in an attempt to collect around PKR 40 billion from people in the new fiscal year.
Property Valuation Rates Increased in 20 Cities By FBR
The major 20 cities which fall under this 30% valuation increase in Pakistan are Karachi, Lahore, Mardan, Multan, Peshawar, Quetta, Rawalpindi, Sahiwal, Sargodha, Gujranwala, Sukkur, Abbottabad, Bahawalpur, Faisalabad, Gujrat, Hyderabad, Islamabad, Jhang, Jhelum, and Gwadar.
This is the second time in these six months that the government has increased the property valuation rates. During February 2019, these rates hiked from an average rate of 20% to 55% of the market value.
Now, FBR has raised the rate to 80% of the market value in order to increase the tax collection more frequently. The purpose of increasing the valuation rates is tax collection from the sale and purchase of the land and apartments. Federal Board of Revenue (FBR) has issued a notification of new rates for property valuation for 20 cities, while for six cities, rates have not decided yet and notification is still pending.
FBR Member Inland Revenue Policy, Dr Hamid Ateeq Sarwar said that as a result of fresh increase, the property valuation rates hike to 85% of the fair value of the market.
The new escalated rates will definitely disappoint the real estate agents and traders, but the aim behind this increase is collection of Rs40 billion tax revenue. This may result in a stagnant real estate sector due to the taxation policy of government and the overall economy may slowdown. They will eventually drive towards the banking sector.
According to the report of the International Monetary Fund (IMF), FBR is going to align immovable properties with new market rates along with specific conditions. As per these new terms, long term lease hold will be considered as a purchase of property.