Introduction:
The Federal Board of Revenue (FBR) had notified a great percentage increase in the market value of properties in 40 cities, including Islamabad. Later, FBR suspended the valuation rates considering the outrage over the new policy, demonstrated by several stakeholders. As of January 16 2022, the department has notified revised valuation rates of property after consultation with Federation of Realtors Pakistan (FRP).
Revised Valuation Rates:
There has been a fair decrease in the previously announced valuation rates, the value of up to five year old residential and commercial superstructures in the federal capital shall be Rs2,000 per square foot and Rs1,000 per square foot if the superstructure is more than five years old. Furthermore, the values of residential immovable properties have been lowered by the FBR, as well as, the rates of Industrial properties.
Impact:
The previously announced, upward pressure on the valuation rates was immensely opposed by the Realtors, as they claimed that the country’s economy is already on a crippling edge and the people can not afford to pay even higher taxes. Following higher taxes (around 17%) and the deal of having to register to the board, Real Estate market would have descended to a slump.
However, Association of Builders and Developers (ABAD) former chairperson Hassan Bakhshi, who was also part of a committee that proposed new valuations to the government, said this new change will help document the economy.
“This new policy will help provincial and federal governments increase tax revenues,” he said.
Final Comments:
The FBR received complaints from across the country from various stakeholders, including real estate agents and town developers, about an extraordinary rise in property rates resulting from the previously notified property valuation.
However, the recently revised valuation rates from the FBR are not facing any criticism as of yet, and the taxes that are to paid seem reasonable for the growth of Real Estate market.
