Karachi, November 27, 2025 – The Federal Board of Revenue (FBR) has provided a detailed explanation of fair market value for transactions conducted during tax year 2026 (July 1, 2025, to June 30, 2026).
The move is aimed at removing ambiguities in the Income Tax Ordinance, 2001, and ensuring taxpayers have clear guidelines.
What Is Fair Market Value?
According to Section 68 of the Income Tax Ordinance, 2001, the fair market value (FMV) of any property, asset, service, benefit, or perquisite is essentially the price it would ordinarily fetch in the open market at a given time. This valuation is independent of any transfer restrictions or whether the asset can be converted to cash.
How FMV Is Determined
The FBR has outlined the following key points for determining FMV:
• If the price of a property or asset is not easily ascertainable, the Commissioner can determine it.
• For immovable properties, the FBR may issue notifications specifying FMV for certain areas.
• If FMV is not specified in the notification, the value fixed by the District Officer (Revenue) or other authorized provincial authorities will apply, mainly for stamp duty purposes.
• For specific purposes like consideration received, valuation under certain sections of the Ordinance, and calculations for immovable properties, the FMV cannot be less than the value set by FBR or other authorized authorities.
Key Clarifications by FBR
• FMV determined by FBR or local authorities is applicable only for tax purposes.
• If the FMV differs from an auction price, the higher of the two values will be applied to ensure compliance.
Why This Matters
This clarification ensures transparency and consistency for taxpayers, helping businesses and individuals properly assess their liabilities. By clearly defining FMV, the FBR aims to reduce disputes and simplify the assessment of assets, benefits, and perquisites for tax purposes.
Tax experts suggest that this move will benefit both taxpayers and authorities by providing a uniform framework for determining the value of assets and transactions during the tax year 2026.
Disclaimer: The information provided in this article is based on the official guidelines and notifications issued by the Federal Board of Revenue (FBR) for tax year 2026. It is intended for general informational purposes only and does not constitute legal or financial advice. Taxpayers are advised to consult the FBR, a certified tax professional, or legal advisor for specific guidance regarding their individual tax obligations and compliance.