Property valuation rate to go up by 20-100% in 42 cities

The Federal Board of Revenue (FBR) is preparing to increase the valuation rate of properties in 42 major cities across Pakistan by 20-100%, depending on the fair market value. The revised valuation tables have been finalised and are set to be forwarded to the Ministry of Law for betting before the final issue. The new valuation rates are expected to be announced within a month.

The FBR did not raise the valuation rates last year due to the change of government. They previously adjusted the rates four times: in 2018, 2019, 2021 and 2022.

The bureau has been assessing a property’s fair market value in major urban cities since 2016. In the provinces the valuation tables are generally issued by the district collector as per Section 27-A of the stamp Act of 1899. The updated property tables will serve as a basis for calculating taxes including capital gains, tax (CGT) and withholding tax. Unlike international practices where tax is imposed on the transaction value, in Pakistan, the collector’s value is frequently significantly lower than the true transaction value.

Moreover, the FBR has also released a Statutory Regulatory Order (SRO) regarding the collection of Federal Excise Duty (FED) on property transactions. As per the SRO, a three percent duty will be levied on the gross amount for registered taxpayers (filers), five percent for non-registered taxpayers (non-filers), and seven percent for individuals not listed on the active taxpayers list.

This duty will be collected at the time of allotment or transfer of commercial property, as well as during the initial allotment or transfer of open plots or residential property at the date of acquisition.