The Federal Board of Revenue (FBR) has decided to engage experts to review property valuation. This decision was taken after several complaints from different quarters received by FBR regarding the recent property re-evaluation. The tax body had recently increased the property valuation rate by 100% to 700%, which left the business sector stagnant. Many stakeholders protested this sudden increase in the valuation because the decision was taken without any due deliberation and involvement of relevant stakeholders, halting many transactions.
The government has advised experts to hold meaningful consultations with key stakeholders, including real estate agents and town developers. Furthermore, there should be recommendations to remove distortion and take property values near market prices in the consultative process.
Until a few years ago, there was no proper system for the valuation of properties, and the government set different rates. The first rate was established by the Federal Board of Revenue (FBR), the second was determined by the District Commissioner (DC), and the third was the market rate. Due to the difference in rates, the government remained unable to generate sufficient tax revenue according to transactions done on market rates. The incumbent government has amended Section 68 of the Income Tax Ordinance 2001, which is considered a principle method for evaluating property value and tax. According to this amendment, all investors will undergo a new system. One or more valuation experts, referred by the Federal Board of Revenue and appointed by the State Bank of Pakistan, will evaluate the market value for tax calculations.
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