Karachi, December 23, 2023 – The Federal Board of Revenue (FBR) has officially announced a meticulous valuation process for discovered hidden assets in Pakistan.
This development comes as part of the FBR’s ongoing efforts to enhance transparency and tackle tax evasion in the country. The valuation process has been detailed in the updated Income Tax Rules, 2002, specifically tailored for the tax year 2024.
Immovable Property Valuation
According to the FBR, the valuation of immovable property for the purposes of section 111 of the Income Tax Ordinance, 2001, concerning hidden or concealed assets, will be determined through the following methods:
1. Fair Market Value: The fair market value of immovable property will be the value notified by the Board under sub-section (4) of section 68, in respect of specified areas.
2. District Officer’s Determination: If the fair market value is not determined by the Board, the value will be deemed to be the one fixed by the District Officer (Revenue) or any other authorized authority for stamp duty purposes.
3. Agricultural Land: The value of agricultural land will be equivalent to the average sale price recorded in the revenue record of the estate for the relevant period.
4. Adjustments: In cases where the sale price recorded is higher than the fair market value, the higher of the two will be applicable. For auctioned properties, the higher of the auctioned price or fair market value will be considered.
Motor Cars and Jeeps Valuation
For the purposes of section 111, the valuation of motor cars and jeeps will be determined based on the following criteria:
1. New Imported Cars or Jeeps: The value will be the C.I.F. value plus all charges, customs duty, sales tax, levies, octroi fees, and other leviable duties until registration.
2. New Locally Purchased Cars or Jeeps: The value will be the price paid by the purchaser, including all charges, customs duty, sales tax, and other taxes until registration.
3. Used Imported Cars or Jeeps: The value will be the import price adopted by customs authorities, plus freight, insurance, and all other charges, taxes, levies, fees, and duties until registration.
4. Depreciation: The value of a car or jeep at the time of acquisition will be reduced by ten percent for each successive year, up to a maximum of five years.
5. Locally Purchased Used Cars or Jeeps: The value will be the original cost reduced by ten percent for every year following the year of import or purchase.
6. Minimum Value: In no case shall the value be less than fifty percent of the value determined by the specified methods or the purchase price, whichever is higher.
Property Donations to Non-Profit Organizations
The valuation process for property donated to non-profit organizations, as outlined in section 61, involves determining the value of articles or goods based on their origin, manufacturing location, previous usage, and nature. The fair market value, as determined by the Commissioner, will be considered for articles not falling under the specified categories.
The FBR’s move to notify this comprehensive valuation process is expected to streamline asset assessment procedures and contribute to the government’s ongoing efforts to curb tax evasion. It marks a significant step towards creating a fair and transparent tax environment in Pakistan. The detailed guidelines provided by the FBR aim to leave no room for ambiguity, ensuring that the valuation process is executed consistently and fairly across the board. As the tax year 2024 approaches, taxpayers and financial entities are urged to familiarize themselves with these updated rules to ensure compliance and avoid potential penalties.
