ISLAMABAD: In a major move, the Federal Board of Revenue (FBR) has jacked up valuation rates of real estate plots in the range of 15 to 25 percent on an average in all the major cities of the country in a bid to increase tax collection up to Rs75 billion, The News reported.
In some posh areas of Karachi, the FBR has jacked up valuation rate in different ranges, starting from 15 percent and going up to 110 percent depending on the locality of the city.
Former Chairman Association of Builders and Developers (ABAD) Arif Jeeva said the FBR increased the valuation rates up to 110 percent for DHA phase 7 and 8 in Karachi while in other areas of the metropolitan city, the valuation rates were increased in the range of 15 to 25 percent on an average.
At a time when the FBR has been facing a shortfall of Rs188 billion in the first seven months (July-Jan) period of the current fiscal year, the FBR took this major step and increased the valuation rates for all the major 20 cities of the country.
FBR Member Inland Revenue Service (IRS) Policy Hamid Ateeq Sarwar on Friday confirmed to The News that the valuation rates were jacked up on an average in the range of 15 to 25 percent. “We hope that the tax collection on property can go up from the projected Rs50 billion level to Rs70-75 billion with this raise in valuation rates,” he added.
However, the sources said that the valuation rates were revised upward from 40 to 60 percent on an average and the FBR intended to increase the rates further in the next financial year probably in July 2019 in order to narrow down the difference between the market value and valuation rates notified by the FBR. “We want to increase our valuation rates close to 80 percent of market value in all the major 20 cities of the country,” said the official.
The FBR issued valuation rates for Karachi, Lahore, Rawalpindi, Islamabad, Faisalabad, Hyderabad, Jhelum, Jhang, Gujrat, Gujranwala, Bhawalpur, Abbottabad, Peshawar, Mardan, Quetta, Sahiwal, Sargodha, Sialkot and Sakkhar. For Karachi, the real estate categories increased from 9 to 11 and for immoveable property in Karachi, Hyderabad and Sukkur, the properties were divided into seven categories.
The FBR had started valuation rates during the tenure of last PML-N-led regime in August 2016, and after holding hectic negotiations with different players of real estate, it was somewhat raised. However, the last N-led government had revised downward some valuation rates in January 2018 for which the FBR had to face criticism that it was done to please voters just ahead of elections. However, the FBR has now again jacked up the valuation rates for all the major 20 cities but still there was difference between the valuation rates notified by the FBR and existing market rates. “There is still a gap of 40 percent and in second expected jerk in July, the FBR will further increase the valuation rates in order to remove the existing distortions among the market rate, DC rates notified by the provinces and valuation rates notified by the FBR,” concluded the official.