Islamabad: The Federal Board of Revenue (FBR) recently announced a temporary postponement in the planned increase in the valuation of immovable properties until September 2023, according to the news shared on August 6.
Reportedly, FBR Chairman Amjad Zubair Tiwana and a team of tax officials discussed the matter at length with representatives from the real estate sector at the FBR headquarters. Both sides reached an agreement to suspend the issuance of increased property values until September 2023. Previously, FBR was in the process of introducing new values this month.
It was announced that local committees will be constituted in each city to decide on new property values in cooperation with real estate associations. The board will meet again in September 2023 to confirm a 10% uniform increase in property values for all immovable properties. This is being done to fix any inconsistencies in property values.
Moreover, the board will introduce an online feature in the updated ‘IRIS’ system, enabling citizens to apply for an exemption or pay the 1% tax on immovable properties under Section 7E without involving the Commissioner Inland Revenue (FBR). This move aims to eliminate the discretion of Commissioners Inland Revenue in deciding the Income Tax Ordinance, 2001, Section 7E matters.
According to the Finance Act of 2022, a new Section 7E was introduced in the ordinance, which requires residents to declare 5% of the fair market value of their domestic capital assets as income. This income is then taxed at a rate of 20%, effectively amounting to 1% of the property value. The FBR has acknowledged problems with implementing the new section. It has assured that the powers of Section 7E will not be misused by the Commissioner of Inland Revenue when granting exemptions.
In an additional development, the Finance Act of 2023 has made an addition to section 236C of the Ordinance, stating that property transfers cannot happen unless the seller has paid their taxes under section 7E and provided proof of this payment to the transferring authority using the prescribed form. The Pakistan Revenue Automation Limited (PRAL) has updated the FBR’s IRIS system to make these changes easier. Taxpayers can find section 7E documents in their IRIS accounts, and the system will automatically grant exemptions or help with tax payments as needed.
As a graduate in English Literature, Zohaib believes that words are not just a mere figment of imagination. It takes wisdom to be good at them. Following this reason, he is pursuing his career as Public Relations and Content Specialist at Zameen.com.
