Business
FBR hikes property prices by 80pc in 56 cities
The revised rates cover 12 new cities, including Bannu, Chiniot, Kotli Sattian and Ghora Gali
Islamabad: The Federal Board of Revenue (FBR) has increased the property valuation rate to 80 percent in 56 cities to bring the property value closer to the market rate, the new rates will be applicable from November 1.
According to the details, its aim is to raise revenue and shift investment to more productive sectors of the economy.
The revised rates cover 12 new cities, including Bannu, Chiniot, Kotli Sattian and Ghora Gali. The government has already implemented several taxes on the real estate sector in the current budget.
FBR Chairman Rashid Muhammad Langriyal said that the prices have been changed keeping in mind the type of property, its location and other factors.
The tax authority has already adjusted property values four times in 2018, 2019, 2021 and 2022.
The FBR started publishing updated property values on its website late on Tuesday night.
In many other countries, the tax is determined based on the transaction value. However, in Pakistan, the declared property value is often significantly less than the actual transaction value.
The FBR collects withholding tax under Sections 236(C), 236(K) and 7(E) of the Income Tax Ordinance, and five percent Federal Excise Duty was also imposed on the sale and purchase of property in the previous budget.
In the last financial year, the FBR collected about Rs150 billion as advance income tax on the sale and purchase of property under sections 236(C) and 236(K). However, data on revenue collected under Section 7(e) and other measures is not yet available.
The FBR has been working since 2016 to determine the fair market value of property in major urban centers while the valuation list in provinces under Section 27(A) of the Stamp Act, 1899 is usually issued by the District Collector.
An FBR official said that they have increased the prices marginally, which is much less than the market expectations, adding that the mid-value plot was used as a benchmark to update the prices.
A World Bank report estimated that Pakistan could collect between Rs600 billion and Rs700 billion in tax from real estate sales, however, tax officials estimate the actual collection to be around Rs200 billion