FBR Releases Valuation Tables 2019 – What to Expect?
It's a promise of 2016, came true in 2019. The Federal Board of Revenue (FBR) has increased property valuation rates for real estate within 20 major cities of Pakistan.
This rise will grow gradually based on another board commitment. The federal authority hopes to raise tax collection from the real estate sector from the existing PKR 50 billion to the PKR 75 billion mark by simply increasing the table rates by 15% to 25%.
The Previous Run-Through
The new assessment tables have allowed FBR to reduce the modification between the rates at which an agreement is concluded and those reported in the transaction act. The property taxes were calculated according to Deputy Commissar's (DC) rate prior to the first publication of the valuation tables in July 2016. Current DC rates across Pakistan are about 80% lower than the corresponding market rates of their properties in question. This is despite the fact that the rates were almost 50% higher two years ago.
The Prime Purpose
In order to make the collection of property taxes feasible, FBR required a new set of valuation tables. The main reason behind the revision is believed to be preventing the investors from parking in the real estate sector with their undocumented money. It is estimated that Pakistan's real estate sector worth PKR 7 trillion, according to recent reports in some news agencies. In 2017-2018, the sector was only marginally contributing 0.1% of GDP – PKR 23 billion in fiscal contributions – to the national economy.
The Amnesty Scheme
In May 2018, the FBR offered an amnesty program to help stakeholders adjust to the planned property tax mechanism. In the event of non - compliance, tax evaders across the country have been encouraged to make use of that concession before its expiry. Currently, FBR is in discussions to get details from offshore owners from a number of foreign governments. Those who chose not to declare their domestic and foreign assets have thus begun to receive official notifications. Many economists hope that the operation will help the country recover billions of rupees with respect to assets if it is carried out in its own spirit.
The Recent Rise
At present, in terms of the tax objective set for the current financial year, the FBR is short of PKR 188 billion. The Board intends to increase its revenue collection and reduce this difference with the recently increased rates of the valuation tables. To achieve this, the FBR raised rates of property evaluation to include the following:
Islamabad, Karachi, Lahore, Peshawar, Quetta, Rawalpindi, Multan, Hyderabad, Faisalabad, Bahawalpur, Gujranwala.
What is next?
The FBR is committed to reducing the gap in fair market values and real - time prices for properties. Of course, this requires steady increase in rates. Many people expect the authority to disclose a new rate table in the forthcoming 2019 - 20 budget to compensate for the lapse.
There is a discernible fear that the move will adversely influence the real estate market as the rates increase twice within a year. Several experts on property believe that the new FBR rates will make black money in the real estate sector even harder with a limit of PRK 5 million imposed on non - filers.
The Board wishes to decrease the rates of the valuation table to close to 80% of property market values according to an FBR official. At present, this metric reads the FBR rates by less than 40 percent. In addition, the Board seeks at provincial and federal level to eliminate all indications of this disparity. Simply put, what comes next is an increase in the rates for the assessment table and the DC rates. This process will continue until the provincial and federal rates notified are less than 20% of the average market value of a property.
April 23, 2019 AT 09:34 AM
Good step taken by FBR. I think it will be good for nation and real estate agents as well. Really appreciate you for this effort. <a href="https://www.zameenforyou.com/properties-for-sale">house for sale in Lahore</a>