As indicated by the
Federal Board of Revenue (FBR) in several recent press announcements, and
anticipated in full in one of our previous blog posts, the board has proposed
new valuation table rates for immovable properties in 18 cities across the
country.
These FBR property valuation rates, as they’re properly referred to
in the going official parlance, currently, await the scrutiny and
revising-suggestions of the stakeholders concerned (with most of them hailing
from the real estate sector) till the June 30 deadline communicated – following
which they will be considered for countrywide implementation starting July 1.
THE
‘18 CITIES’ IMPACTED BY THIS CHANGE
According to a news
source, the FBR has said that it's draft valuation tables will become applicable
from July 1 onwards in various areas and housing schemes of:
·
Lahore
·
Islamabad
·
Rawalpindi
·
Peshawar
·
Hyderabad
·
Faisalabad
·
Multan
·
Gujranwala
·
Bahawalpur
·
Abbottabad
·
Gujrat
·
Jhelum
·
Jhang
·
Mardan
·
Sahiwal
·
Sialkot
·
Sargodha
·
Sukkur
You can find the proposed valuation table PDF for these cities, which the board intends to implement from July 1 onwards, on the official website of the
FBR.
Also, do bear in mind
that these rates are only tentative at the moment.
COUNTERING
THE EFFECTS OF THESE RATE HIKES: TAX & RELIEF
 |
| FBR Pakistan |
In this revised property valuation tables, the rates for determining the federal taxes on the sales and purchases of immovable properties have been increased at varying percentages. In some cases, the rates have gone up by over 200%, but if we compare the FBR’s newly proposed values with the average market price of an affected property, the board’s valuation still falls behind by over 20%.
In an attempt to reduce
this difference to 15%, the FBR plans to inch up its valuation rates to 85% of
the property’s real market value.
For people familiar with the situation
being faced by the real estate marketplace since the introduction of July
2016’s property valuation tables, these new valuation indices may come across
as being a bit too much for the sector. Being cognizant of this market
predilection, a counter-strategy was proposed by State Minister on Revenue
Hammad Azhar in his Budget 2019-20 speech
of June 11.
The minister
stated that, along with finalizing the plans to increase the FBR’s valuation
rates, the government will aim to reduce the percentage of withholding tax
imposed on property buyers and sellers from 2% to 1% (the ‘reprieve’ to go
along with the tax hike).
THE
OLD VS THE NEW
On a telling
note, the FBR’s new valuation table drafts for immovable properties do not list
any increased rates for Karachi and Quetta.
Now the board may or may not share these details before June 30; but even if it does,
the new rates are likely to be higher by 20% to 30% when contrasted with the
ones shared in February for these cities.
For the convenience of our readers, we have compared the new property valuation rates
for Islamabad and Lahore with those notified in February 2019 in the table
below:
|
Islamabad
|
FBR Rates – per sq. yd
for residential plots
|
Percentage rise
|
|
|
Sector
|
Old (Feb-19)
|
New (July- 19)
|
|
|
D-12
|
38,760
|
68,000
|
75%
|
|
E-7
|
68,580
|
148,000
|
116%
|
|
E-11
|
31,200
|
64,000
|
105%
|
|
E-12
|
18,371
|
37,600
|
105%
|
|
F-6
|
58,260
|
136,000
|
133%
|
|
F-7
|
58,260
|
132,000
|
127%
|
|
F-8
|
58,260
|
120,000
|
106%
|
|
F-10
|
50,460
|
104,000
|
106%
|
|
F-11
|
50,460
|
88,000
|
74%
|
|
G-6
|
49,620
|
88,000
|
77%
|
|
G-7
|
45,720
|
88,000
|
92%
|
|
G-8
|
45,720
|
88,000
|
92%
|
|
G-9
|
45,720
|
84,000
|
84%
|
|
G-10
|
45,720
|
92,000
|
101%
|
|
G-11
|
45,720
|
88,000
|
92%
|
|
G-13
|
45,720
|
56,000
|
22%
|
|
G-14
|
40,000
|
48,000
|
20%
|
|
I-8
|
45,720
|
96,000
|
110%
|
|
I-9
|
19,200
|
64,000
|
233%
|
|
I-10
|
19,200
|
60,000
|
213%
|
|
I-11
|
19,200
|
48,000
|
150%
|
|
I-12
|
18,000
|
44,000
|
144%
|
|
I-14
|
18,000
|
40,000
|
122%
|
|
I-15
|
8,208
|
24,000
|
192%
|
|
I-16
|
11,479
|
26,400
|
130%
|
|
B-17, C-15, C-16,D-13,
D-17, G-15, G-16, F-14, F-15, F-16, F-17
|
As per district
collector’s rates
|
When looking at the figures listed for Islamabad, the percentage rise proposed for some areas might appear too much for a lot of people, but that fact remains that the rates notified in the old tables were conspicuously undervalued in comparison with fair market prices. Not to mention that the District Collector’s (DC) rate still remains applicable in various sectors of Islamabad Zone II: B-17, C-15, C-16, D-13, D-17, G-15, G-16, F-14, F-15, F-16, and F-17.
Here is what the FBR’s
rate list for Lahore (2019-20) looks like when compared with the one issued
earlier this year:
Lahore
|
Old FBR Rate Per
Marla (Feb 2019)
|
New FBR Rate Per Marla
(Jul 2019)
|
Percentage
Rise |
Bahria
Education & Medical City |
132,600
|
218,790
|
65%
|
LDA City
|
198,000
|
326,700
|
65%
|
DHA Phase I
|
806,400
|
880,000
|
9%
|
DHA Phase II
|
662,400
|
880,000
|
33%
|
DHA Phase III
|
662,400
|
960,000
|
45%
|
DHA Phase III Y & Z
Block
|
921,600
|
1,040,000
|
13%
|
DHA Phase IV
|
630,630
|
1,080,000
|
71%
|
DHA Phase V
|
504,000
|
1,240,000
|
146%
|
DHA Phase VI
|
486,000
|
1,100,000
|
126%
|
DHA Phase VII
|
386,000
|
600,000
|
55%
|
DHA Phase VIII
|
378,000
|
840,000
|
122%
|
DHA Phase IX
|
270,000
|
400,000
|
48%
|
DHA Phase X
|
270,000
|
160,000
|
-41%
|
DHA Phase XI
|
270,000
|
560,000
|
107%
|
DHA Rahbar
Sector (Sadhoki) |
405,600
|
510,930
|
26%
|
DHA
(Dulu Khurd) |
405,600
|
669,240
|
65%
|
State Life
Housing Scheme (Kamahan) |
343,200
|
566,280
|
65%
|
Central Park
|
264,000
|
435,600
|
65%
|
Pak Arab
Housing Scheme (Chandrai) |
528,000
|
871,200
|
65%
|
Ghazi Road
(Ferozepur Road to Jhatta Chowk) |
1,056,000
|
1,742,400
|
65%
|
Gajjumatta &
adjoining abadis |
330,000
|
544,500
|
65%
|
Ferozepur
Road (Kot Lakhpat to Gajjumatta) |
1,320,000
|
2,178,000
|
65%
|
Gulberg Main Boulevard
|
1,339,200
|
2,209,680
|
65%
|
Gulberg I, II, III, IV
& V
|
835,200
|
1,378,080
|
65%
|
DHA (Padri,
Bhangali, Chak Bharat & Dhoori |
700,800
|
1,156,320
|
65%
|
Green City
|
628,800
|
1,037,520
|
65%
|
Sui Gas Society
(Chung
Punjgrain) |
392,250
|
647,213
|
65%
|
New Lahore
City (Sultankay/Sundar) |
138,750
|
228,938
|
65%
|
Wapda Town
|
504,000
|
831,600
|
65%
|
Thokar to
Shaukat Khanum Road |
601,200
|
991,980
|
65%
|
Khayaban-n-Jinnah To
Raiwind Road
(both sides) |
592,800
|
978,120
|
65%
|
Raiwind Road (Thokar
Chowk to Bhobatian)
|
324,150
|
534,848
|
65%
|
LDA Avenue-I
|
331,800
|
517,770
|
56%
|
Johar Town
|
561,600
|
926,640
|
65%
|
Johar Town
(Main Roads) |
699,600
|
1,154,340
|
65%
|
Jubilee Town
|
328,800
|
542,520
|
65%
|
EME Society
|
675,000
|
880,000
|
30%
|
Bahria Town
|
574,200
|
800,000
|
39%
|
Paragon City
|
180,000
|
297,000
|
65%
|
The percentage rises for Lahore appear
pretty reasonable, especially if you consider that the new rates are still
lower by approximately 25% of the property’s fair market price.
WHAT
TO EXPECT NEXT
The rates
notified in the valuation tables above have to go up – that’s for sure. But
will the government wait for the next budget to reveal the finalized rates? Now
that is a question which is worth asking at this stage.
It is clear, however, that
the stringent measures currently being undertaken by the government are geared
towards documenting the real estate sector, increasing the national tax net,
and benefitting the stakeholders.
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