Mohsin Siddiqui (Chief Reporter)
The Federal Board of Revenue (FBR) has been striving to extend its tax reach to developers and builders, with a focus on integrating new housing societies into the tax net. However, recent developments indicate challenges and delays in achieving this objective.
It has come to light that the FBR plans to revise the values of immovable properties starting from July 1, 2024. This initiative involves updating valuation tables for properties across Pakistan, with consultations underway with provincial authorities.
Previously, the FBR was tasked with determining values for new housing societies as well, with the last valuation exercise conducted in March 2022. However, the revision of property rates has not occurred for over two years, despite the FBR’s commitment to bringing new housing societies into the tax net.
A temporary suspension of proposed increases in property valuations was agreed upon until September 2023, following discussions between the FBR and the real estate sector. Committees were formed in various cities to collaborate with real estate associations in determining new values. However, progress on finalizing these values has stalled.
It is anticipated that updated property rates will be announced in June 2024, with implementation slated for July 1, 2024. Additionally, the Federal Tax Ombudsman (FTO) has directed the FBR to ensure real-time valuation of housing schemes in affluent areas for accurate property valuation.
Concerns have been raised regarding the exclusion of certain residential schemes from the valuation table, leading to inconsistencies in determining fair market value. The FTO’s office emphasized the importance of employing internationally recognized valuation standards, such as those outlined by the International Valuation Standards Council (IVSC).
The FTO recommended adopting a principles-based approach to valuation, emphasizing integrity, objectivity, and professionalism among valuers. Furthermore, it highlighted the necessity for valuers to possess the requisite technical skills and knowledge to perform valuation assignments accurately.
In conclusion, the FBR’s efforts to incorporate developers and builders, especially new housing societies, into the tax net face challenges due to delays in property valuation updates and inconsistencies in valuation standards. Addressing these issues and implementing standardized procedures are crucial steps towards ensuring fair and transparent property valuation practices in Pakistan.
