{"id":26193,"date":"2017-06-08T23:13:18","date_gmt":"2017-06-08T18:13:18","guid":{"rendered":"http:\/\/www.zameen.com\/blog\/?p=26193"},"modified":"2020-06-16T14:32:45","modified_gmt":"2020-06-16T09:32:45","slug":"fbr-gears-up-to-increase-valuation-tables-rate-by-30","status":"publish","type":"post","link":"https:\/\/www.zameen.com\/news\/fbr-gears-up-to-increase-valuation-tables-rate-by-30.html","title":{"rendered":"FBR gears up to increase valuation tables\u2019 rate by 30%"},"content":{"rendered":"

\"\"<\/p>\n

The Federal Board of Revenue (FBR) is expected to increase the fair market value<\/a> of property in its valuation tables by 30% from July, according to a news source. The news has left many baffled because the board had previously committed to bringing these rates down on the persistent demand of real estate brokers.<\/p>\n

The incorporation of the new tax collection regime<\/a> from July last year brought along a slump in the real estate market that lasted several months. In response, estate agents in all major cities staged a series of protests, demanding the government rollback the taxes. The main element that bothered real estate stakeholders was the valuation tables.<\/p>\n

The previous mechanism<\/strong><\/p>\n

Before the proposal to determine the fair market value was made official last year, all property taxes were calculated on Deputy Commissioner (DC) rates – which were alarmingly low. The FBR planned to increase tax revenue by setting up a fair market value for property. And despite how that happened, the purpose was indeed served.<\/p>\n

Deciding on valuation tables<\/strong><\/p>\n

To decide on the rates that were to be mentioned in the valuation tables, several rounds of negotiations were held between representatives of the FBR and stakeholders. Through mutual consent, apparently, the valuation tables that included the fair market value of property – identified for collecting Withholding Tax and Capital Gain Tax (CGT) – were finalised<\/a> and shared. The FBR shared the valuation tables for properties in some 21 cities<\/a> during the first week of August 2016.<\/p>\n

This, nonetheless, didn\u2019t please stakeholders because many anomalies were found in FBR\u2019s notified rates<\/a> in several areas of Karachi, Peshawar, Faisalabad, Lahore and Rawalpindi. The authorities showed an interest to fix these anomalies after stakeholders\u2019 backlash.<\/p>\n

What\u2019s the latest from FBR?<\/strong><\/p>\n

The FBR has seen the outcome of collecting the Withholding Tax and CGT on the new valuation tables. According to the stats issued by the board, it has collecting a much higher percentage of taxes compared to what was collected in the previous fiscal year. The tax revenue and the property transaction volume increased by 100% and 10% respectively between July 2016 and April 2017.<\/p>\n

While introducing this tax collection mechanism last year, the FBR did hint that it will increase the rates in the valuation tables gradually each year. According to FBR officials, even after a rise of 30% from July onwards, the new rates in the valuation tables will still be much lower than the market value of property in different cities.<\/p>\n

In addition to a 30% rise, the FBR is also looking to issue valuation tables for some more cities, making the count reach 30. Some of the cities on the board\u2019s list include Okara, Khairpur, Shaheed Benazirabad, Okara and Larkana.<\/p>\n

The good part<\/strong><\/p>\n

A 30% rise in valuation tables\u2019 rate is not good news for some because it means that compared to last year\u2019s taxes, they will be paying an even higher sum. On the other hand, it is about time that rates for areas where the FBR\u2019s assessment of fair market value was unreasonably high are fixed.<\/p>\n

According to the proposal given by a parliamentary panel about fixing anomalies in the valuation tables, rates may also be lowered for properties in several areas of Karachi and Faisalabad. The proposed areas in Karachi include Defence Housing Authority, Port Qasim Authority, SITE Industrial Area and Sindh Graduate Multipurpose Memon Goth Industrial Estate.<\/p>\n

In areas where the difference in the rates mentioned in the valuation table and that of the market rate is lower, the FBR may only increase the valuation table\u2019s rates by 15% to 20%.<\/p>\n

Some more proposals<\/strong><\/p>\n

Seeing a 100% rise in revenue collected from the Withholding Tax alone, the government is looking to squeeze more juice out of the property sector. In order to do so, it is planning to bring in more housing societies under tax, which weren\u2019t covered before.<\/p>\n

In addition, the board has proposed an amendment in Section 236-C, which deals with entities responsible for collecting taxes on property sale.<\/p>\n

According to this proposal, the person registering a property transaction will act as FBR\u2019s agent and collect the Withholding Tax, just like those who register or attest properties. In addition, the board has given another proposal, i.e. the local authorities, housing and cooperative societies, and property registrar, will also collect taxes that are collected at the federal level.<\/p>\n

The outcome<\/strong><\/p>\n

The real estate market will certainly react to this rise in valuation tables and it may hibernate for a while before adjusting to these changes. I expect real estate brokers and property consultants to get active again to get the anomalies fixed in the valuation tables that were issued by the FBR last year.<\/p>\n

In the coming time, these agents may identify more anomalies because over the course of the last year property rates in many areas dropped. And it makes complete sense for the valuation tables to reflect the drops.<\/p>\n

We also expect to see its impact on property rates, which might be more visible in the coming months. We will keep on sharing market updates with you; meanwhile if you have a feedback on this article, let me know through your comments.<\/p>\n","protected":false},"excerpt":{"rendered":"

The Federal Board of Revenue (FBR) is expected to increase the fair market value of property in its valuation tables by 30% from July, according to a news source. The news has left many baffled because the board had previously committed to bringing these rates down on the persistent demand of real estate brokers. The incorporation of the new tax collection regime from July last year brought along a slump in the real estate market that lasted several months. In response, estate agents in all major cities staged a series of protests, demanding the government rollback the taxes. The main element that bothered real estate stakeholders was the valuation tables. The previous mechanism Before the proposal to determine the fair market value was made official last year, all property taxes were calculated on Deputy Commissioner (DC) rates – which were alarmingly low. The FBR planned to increase tax revenue by setting up a fair market value for property. And despite how that happened, the purpose was indeed served. Deciding on valuation tables To decide on the rates that were to be mentioned in the valuation tables, several rounds of negotiations were held between representatives of the FBR and stakeholders. Through…<\/p>\n","protected":false},"author":18,"featured_media":26220,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[15015],"tags":[3865],"persona":[],"class_list":{"0":"post-26193","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-legal-taxation","8":"tag-details-on-fbr-increasing-valuation-tables-rate-by-30","9":"cat-15015-id"},"acf":[],"yoast_head":"\nFBR gears up to increase valuation tables\u2019 rate by 30% - Zameen News<\/title>\n<meta name=\"description\" content=\"The Federal Board of Revenue (FBR) is expected to increase the fair market value of property in its valuation tables by 30% from July, according to a news\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.zameen.com\/news\/fbr-gears-up-to-increase-valuation-tables-rate-by-30.html\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"FBR gears up to increase valuation tables\u2019 rate by 30% - 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