Islamabad, October 30, 2024 – In a move aimed at aligning property values with actual market rates, the Federal Board of Revenue (FBR) has revised the valuations of immovable properties across Pakistan, significantly impacting withholding tax collection.
This comprehensive adjustment, effective from November 1, 2024, marks an upward revision of up to 75% in the values of properties in 56 cities, with new valuations meticulously outlined for residential, commercial, and industrial sectors.
After extensive deliberations with key stakeholders, including developers and builders, the FBR issued notifications late Tuesday. The adjustment is backed by Section 68(4) of the Income Tax Ordinance, 2001, authorizing the FBR to set fair market values for properties across specified areas and categories. The new valuation tables, vetted by the Law and Justice Division, underscore the FBR’s intensified efforts to bring assessed property values closer to prevailing market rates.
This adjustment, the fifth in a series since 2018, follows previous valuations set in 2018, 2019, 2021, and 2022. Unlike last year, when valuations remained unchanged, the current recalibration underscores the FBR’s resolve to enhance tax revenue while discouraging under-declaration of property values. This increment aims to diminish the discrepancies between the official valuations and actual market prices, fortifying transparency in Pakistan’s real estate sector.
The upward valuation extends across a broad spectrum of Pakistani cities, encompassing major urban centers such as Islamabad, Karachi, Lahore, Quetta, and Peshawar, as well as smaller cities like Attock, Gujrat, Mansehra, Sargodha, and Toba Tek Singh. The newly notified values distinguish between residential, commercial, and industrial properties, reflecting unique market conditions in each segment.
The enhanced valuation tables, finalized after extensive feedback from the construction and real estate industries, represent a progressive yet cautious recalibration, factoring in the reservations of developers and property stakeholders. While some areas see modest increases, other high-value urban centers face a marked rise, with valuations now closely paralleling 75% of market rates.
The FBR’s revision aligns with the Federal Tax Ombudsman’s recent directive, which had set an October 11, 2024, deadline for updating immovable property values. As the new valuations come into effect, the real estate industry anticipates varied impacts. Developers and investors face higher tax liabilities, yet these adjustments are seen as a critical step toward a more transparent and equitable taxation system.
This landmark revision reinforces the FBR’s commitment to fostering greater financial accountability within Pakistan’s property sector, ensuring that property valuations better reflect the realities of a dynamic real estate market. The new valuations are expected to play a pivotal role in reshaping the tax landscape, directly impacting the economy and bringing Pakistan one step closer to bridging gaps in tax revenue collection.