Government Gearing up to Increase Property Valuation Rates by 30%
ISLAMABAD: A step that is anticipated to irk real estate agents and traders much like it did last year: the government is all set to further boost property valuation tariff by about 30% for main cities of the country from July.
Through this move, once tagged ‘dead for revenue purpose’ real estate sector has started generating revenue for tax authorities.
Consequently, the augmentation in property assessment rates for federal tax intentions under the first phase, the government’s incomes from the sector increased 100% to roughly Rs15 billion while property operations also grew by one-tenth through the July-April period of the departing financial year.
The Chairperson of Federal Board of Revenue (FBR), Dr. Mohammad Irshad said this Tuesday: “Under the second phase, the government would inform fresh property valuation tariff for major cities by June 30.” Irshad stated that the rates would rise by another 30% on standard, but these would still be inferior to the actually existing market rates.
According to Irshad the government also intends to raise the number of cities incorporated in the plan from 21 to just about 30. The new rates will be notified after the approval of the Finance Bill 2017.
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According to a statement from the FBR officials, there was an arrangement to bring Larkana, Khairpur and Shaheed Benazirabad under the realm of the new property valuation system. At least two more cities will be incorporated in the list and there’s a good chance that Okara might be one of them.
In August of 2016, FBR notified fresh property valuation rates for 21 major cities which granted a new base for the compilation of withholding and capital gains tax. Withholding tax toll ranges from 1% to 3% while the CGT rates are in the array of 5% to 10%.
These tolls were higher than the existing Deputy Collector tariff but were still only 30% to 40% of definite market rates.
Officials of the FBR said that the new plan is that the property valuation rates should prop up by another 25% to 30% on standard over and above the formerly amplified rates. In cases, where the rates were former on the higher side, the rise could be 15% to 20%. Nonetheless, there would also be cases where the FBR would lessen the rates, chiefly in Karachi and Faisalabad.
The FBR had already notified rates for cities like Gwadar, Quetta, Sukkur, Lahore, Multan, Gujranwala, Faisalabad, Sialkot, Islamabad, Karachi, Mardan, Hyderabad, Sargodha, Abbottabad, and Peshawar.
The authorities had chosen these 21 cities for determining new, but slightly negotiated, property valuation rates through its compromises with the agents of the real estate sector.
The administration and the realty sector spokespersons had settled to augment the rates, which are higher than Deputy Collector (DC) rates but far lesser than the current market rates.