| Islamabad: The Federal Board of Revenue (FBR) has announced an increase in property valuation rates by up to 80% across 56 cities, effective November 1. The news was reported by a source on October 30.
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As per detail, the latest revision includes 12 new cities, such as Bannu, Chiniot, Kotli Sattian, and Ghora Gali, expanding the coverage beyond the previously included 44 cities. FBR Chairman Rashid Mahmood Langrial stated that the valuation rates have been “moderately revised upward,” with changes based on property type, location, and other relevant factors.
This is not the first time the FBR has adjusted property valuations; similar revisions took place in 2018, 2019, 2021, and 2022. The updated valuation tables were published on the FBR’s website late Tuesday, with tables for approximately two dozen cities available at the time of reporting.
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The revised valuations will determine federal taxes, including capital gains tax (CGT) and withholding tax. Unlike many countries where taxes are calculated based on transaction values, property transactions in Pakistan often declare a collector value significantly lower than the actual price.
Under Sections 236C, 236K, and 7E of the Income Tax Ordinance, the FBR collects withholding taxes, along with a 5% federal excise duty imposed on property transactions in the latest budget. In the previous fiscal year, the FBR collected nearly Rs150 billion in advance income tax under these sections, while figures for revenue collected through Section 7E and other measures remain pending.
Since 2016, the FBR has been working to establish fair market property prices in major urban centers. In provinces, valuation tables are typically issued by district collectors under Section 27-A of the Stamp Act of 1899.
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A senior tax official involved in the valuation revision process noted that the increases were less significant than initially anticipated. “We have increased rates marginally, well below market expectations,” the official explained, adding that mid-range plot values were used as benchmarks for the price updates. The official acknowledged the potential for errors in the valuation tables, promising corrections as issues are identified.
Determining accurate transaction values has been challenging for the FBR, as property prices can vary widely among different societies and cities. The official also highlighted that, despite the government’s aim to shift cash from real estate to more productive sectors, many transactions in housing societies have stalled, with no clear evidence of funds being redirected.
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A World Bank study estimates that real estate transactions in an economy comparable to Pakistan could generate tax revenues of between Rs600 billion and Rs700 billion. However, the tax official estimated Pakistan’s actual collection to be roughly Rs200 billion. |
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