The valuation tables released by the Federal Board of Revenue (FBR) on July 01, 2016 for the purpose of property tax calculation have met with criticism by real estate brokers, investors, property owners and even from industrialists. In some cases, these concerns do seem valid as the scale to measure property size and the categories to classify different property types aren’t the same in all provinces of Pakistan.
Based on the reservations expressed by the DHA, there might be a revision in valuation tables for DHA projects. With these revisions, concerns of other stakeholders should also be addressed. Reportedly, rates quoted in the FBR valuation tables for properties in many areas of Peshawar are higher than their market rates. Furthermore, Old DC rate is still applicable for calculating property taxes in different zones of Islamabad.
A detailed autopsy of the valuation tables has been done by the Pakistan Hosiery Manufacturers and Export Association (PHMEA). PHMEA Chief Coordinator Jawed Bilwani wrote a letter to the prime minister on behalf of the industrial and commercial sectors, identifying some major discrepancies in FBR valuation tables. Coming direct from the industrial sector, this feedback can’t be based on personal interest or in support of the black money that had, reportedly, made the real estate sector too expensive for common people and genuine buyers.
According to Bilwani, property in Sindh is measured in square yards, while in Baluchistan, property is measured in square feet. In Punjab and Khyber Pakhtunkhwa marla is the unit of measurement for property area, the size of which is not the same in all cities of these two provinces. He also highlighted that property in Sindh is categorised into commercial, residential, and industrial plots, with industrial property further classified into built-up and open plot categories. Whereas, there is no industrial category in the FBR valuation tables issued for properties in Punjab, Khyber Pakhtunkhwa and Baluchistan.
Balwani has also identified that the per square foot rate mentioned in Karachi’s FBR valuation tables for Category I and II industrial plots is the same for built-up properties, but it is different for open plots, which is unfair. And as there is no industrial category to impose FBR’s new taxes on the industrial property in other provinces, this categorisation for property in Sindh is quite discriminatory.
This doesn’t end here, Bilwani also finds the FBR rates for developed areas housing industrial plots unjustifiable. According to him, the per square foot construction cost of industrial plot in Karachi lies between PKR 800 and PKR 1000 but the government has fixed the FBR rate at PKR 3,000 for calculating property tax.
Bilwani is of the view that the FBR rates will leave adverse effects on Karachi – a city from where 54 percent of the total tax is earned by the authority. Let’s see how FBR responds to discrepancies pointed out by Bilwani.
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It is a humble request to FBR team to reconsider subsidized tax slab and increase it as per current market valuation. All valuation can be found by visiting any Real Estate Website. For Example DHA Phase 8 is currently traded above 80,000 PKR / Sq Yard where as FBR has only charged 35,000 PKR / Sq Yard which is less than 50% of actual value.
GOOD INSIGHT RIAZ BHAI
Values with taxation and registrar are always lower, “currently traded” has an embedded portion of greed so it is irrelevant for the purpose of taxing black marketeers.
It is a genius move to juice them, seriously… I am no FBR guy but positively sure it will bring market prices to normalcy.
Assalam O Alaikum. This is true as in we have seen many discrepacies in commercial properties rate assessment. Like I-10 class C markets, the rate assessed is at least 5 times of the market rate. If the covered area is considered per square yard instead of per square feet, then it hardly works close to actual.
Assalam O Alaikum. This is true as in we have seen many discrepacies in commercial properties rate assessment for Islamabad. Like I-10 class C markets, the rate assessed is at least 5 times of the market rate. If the covered area is considered per square yard instead of per square feet, then it hardly works close to actual.
http:// www. brecorder. com/pakistan/industries-a-sectors/taxation/181:pakistan/94366:real-estate-sector-no-amnesty-scheme-under-study-fbr/?date=2016-10-19
no amnesty coming for real estate prices are not going to spiral down so that genuine buyers can buy