ISLAMABAD: The real estate sector submitted details of the current market rates to the Federal Board of Revenue (FBR) on Wednesday, showing an average increase of around 70 per cent in property prices from existing deputy commissioner-approved (DC) rates.

The 13-member delegation of retailers, led by Arif Jeewa — senior vice chairman of the Association of Builders and Developers (ABAD) — submitted market rates of properties in 18 cities across the country.

The 18 cities include Islamabad, 10 cities from Punjab, three from Sindh and two each in Khyber-Pakhtunkhwa and Balochistan.

“This list is an enhancement from the DC-approved rates and FBR officials are evaluating it,” Mr Jeewa told Dawn.

The next meeting between the two sides is scheduled to be held on Thursday (today), and will be chaired by Haroon Akhtar Khan, special assistant to the prime minister on revenue.

FBR conducting comparative analysis of property prices in 18 cities

The decision to update property rates in these cities was made during a meeting between representatives of the real estate sector and the FBR on July 21, while the government decided to withdraw the proposal of establishing ‘valuators’ to counter-check property rates.

To update current market rates within a week, the 13-member committee forwarded the list of DC-approved rates to the association of real estate agents and developers in each respective city.

The list of DC rates contains several categories depending upon the size of the city — for example, DC-approved rates in Karachi have five categories, starting with Category A1, which includes areas like Bath Island, Clifton, Dhorajee and the KDA Officers Scheme, etc. This is followed by Category 1, and so on to Category 4, which includes areas such as Liaquatabad, Landhi, Korangi, Keamari, Hawkesbay, etc.

The government has decided to charge withholding tax on the sale and purchase of property and capital gains tax after the final value of the property is determined.

It has been estimated that charging tax on the sale and purchase of property at updated rates would help the government bag up to Rs10 billion during the current financial year. However, officials maintain that the move is aimed at “documenting the economy”.

An FBR official told Dawn that the evaluation was under way, but differences have been deducted.

“The rates have been vetted and verified from market experts and the rates are being analysed,” the official said, adding, “An initial comparative analysis of the rates provided by the real estate industry and those collected by the FBR shows that some rates are reasonable, but there is significant divergence in some areas.”

Though their next meeting is scheduled for Thursday, an FBR official maintained that a comparative analysis of both rates could take another day, and that final rates might be determined by Friday.

Published in Dawn, July 28th, 2016