ISLAMABAD: To bring an end to the ongoing controversy over the decision to increase valuation rates for property, the Federal Board of Revenue (FBR) on Tuesday held in abeyance the new valuations for taxation until January 16 next year in the wake of an extraordinary rise in property rates and complaints from realty stakeholders.

The FBR had on December 1 revised upwards the property valuations for the purpose of taxation in 40 major cities of the country to bring them on a par with market rates. The rates were revised in order to charge actual income tax on property transactions.

An official announcement said all chief commissioners inland revenue (CCIRs) would constitute valuation review committees (VRCs) and notify them by December 10. Any stakeholder having any reservations over the valuations may lodge a representation before the VRC by Dec 15.

The CCIRs will undertake meaningful consultative processes with the stakeholders and engage the SBP-approved valuers for determination of values, which could be either more or less than the lately notified valuations.

Realty stakeholders highlight anomalies, aberrations in the notified valuation tables

The FBR has already announced engaging top property valuation experts of the State Bank of Pakistan who will hold meaningful consultations with the key stakeholders, including real estate agents and town developers. This consultative process will review such cases individually and thereby make necessary recommendations to remove distortions if any and bring property value near market price.

Until this process is completed, the application of new valuation rates will be suspended till mid-January 2022. The FBR received complaints from across the country from various stakeholders, including real estate agents and town developers, about an extraordinary rise in property rates resulting from the recently notified property valuation.

To begin with, the FBR issued detailed instructions through an office memorandum on the procedure to be adopted to review the anomalies in the property rates and rationalise the same. Accordingly, it has been decided to review and revisit the notified valuation tables wherever overvaluation or undervaluation is pointed out by a stakeholder.

It is pertinent to mention that the FBR is empowered to determine fair market value of immovable properties in terms of Section 68(4) of the Income Tax Ordinance, 2001. Therefore, the FBR vide SRO No.1534-1572(I)/2021 issued new valuation tables of properties across 40 major cities with a view to bringing them closer to the actual market prices.

However, the FBR received certain objections from various stakeholders, including real estate agents and housing societies, highlighting anomalies and aberrations in the newly notified valuation tables. Although the notified valuations have been arrived at by the FBR Field Formations through a rigorous consultative process and wherefore have largely been well received, yet the possibility of error cannot be ruled out, and the same cannot be taken as carved in stone.

The VRCs will take a decision on the representations by January 10, 2022, and forward the same to the FBR for notification. All recommendations made by the VRCs on revaluations will be re-notified on January 15, 2022, which will come into force on January 16.

In the meantime, SRO1534-1572(I)/2021 is held in abeyance to allow registration of in-process transactions, said the announcement.

Published in Dawn, December 8th, 2021