FBR Revises Valuation of Properties in Major Cities
The situation improved with time as the dropped rates allowed genuine buyers and investors to take benefit of the opportunity and park their hard-earned money in realty sector. Now, real estate experts are sure that the genuine investors are in the market and they invest having long-term plans in mind.
With the beginning of 2018, the Federal Board of Revenue (FBR) came up with revised version of its valuation of properties in few areas of six major cities (Karachi, Islamabad, Lahore, Rawalpindi, Peshawar and Faisalabad) by more than a half. FBR has issued six notifications to cut down the valuation of properties by up to 55 percent in these cities.
Earlier in August 2016, the FBR issued valuation table for 20 major cities for the first time in order to bring black money invested in realty sector into the documented economy. The Tax experts are of the view that the FBR issued valuation tables after consultation with all the stakeholders with assurance that the notified values would gradually be increased in the upcoming years.
The business community urged the tax authorities to revise down the valuation of industrial open and constructed plots. It is noticed that the valuation tables were revised down for mostly posh residential areas. In latest move, FBR is said to reduce the valuation of industrial plot to Rs9,603 per square yard from previous valuation of Rs12,000 per square yard in Karachi. And the valuation was reduced to Rs7,500 from Rs9,100 for residential plots located in DHA Phase-9, Karachi.
Due to reduction in prices, the revenue body is concerned about the decrease in its tax revenue collection from properties. FBR collects withholding tax, under Section 236C of the Income Tax Ordinance, 2001, from sellers and, under Section 236K, from purchasers of properties in line with its valuation tables.
According to the tax experts, the authority has softened the valuation to please the industrial sector ahead of general elections of 2018. Few of them are of the view that the downward revision of valuation table would only promote black money and affect revenue collection. Seeing the disparity in the fair market and FBR values and DC rates, we can say that there is a dire need to bring uniformity in the property valuation to increase documentation.