If you have concealed immovable property that is later detected by the Federal Board of Revenue (FBR), the tax authorities are legally empowered to determine its value under the Income Tax Rules, 2002, as amended up to November 24, 2023.
This valuation becomes crucial for proceedings under Section 111 of the Income Tax Ordinance, 2001, which deals with unexplained income and assets.
So how exactly does FBR calculate the value of such undisclosed property? Let’s break it down in a clear, reader-friendly way.
Step-by-Step: How FBR Determines Property Valuation
Under Rule 228C of the Income Tax Rules, 2002, the fair market value (FMV) of immovable property is determined using the following hierarchy:
1️⃣ FBR-Notified Valuation Rates
If FBR has already notified valuation rates for a specific area under Section 68(4) of the Income Tax Ordinance, those rates will be treated as the fair market value.
👉 This usually applies to major urban and commercial areas.
2️⃣ Stamp Duty Value (When FBR Rates Are Not Available)
If no FBR valuation exists for a particular area, the value fixed by:
• District Officer (Revenue), or
• Provincial government, or
• Any other authorized authority
for stamp duty purposes will be considered the fair market value.
3️⃣ Valuation of Agricultural Land
For agricultural property, FBR applies a different benchmark:
• The value is calculated based on the average sale price of land recorded in the revenue estate record for the relevant period.
Special Rules You Must Know
| Situation | Value Applied |
| Sale price higher than FMV | Higher sale price |
| Auctioned property | Higher of auction price or FMV |
| Mixed valuation sources | Highest applicable value |
📌 In simple terms, FBR always applies the higher value to protect revenue.
Why This Matters for Taxpayers
Once FBR determines the value:
• The amount can be treated as unexplained investment
• Additional tax, penalties, and default surcharge may apply
• Proceedings under Section 111 can be initiated
This makes concealment of property a high-risk strategy under current tax enforcement measures.
Quick FAQs
Q: Can I challenge FBR’s valuation?
Yes, but only through proper appellate forums and documented evidence.
Q: Does this apply to inherited property?
If inheritance is properly declared and documented, Section 111 may not apply.
Q: Is valuation different for urban vs rural areas?
Yes. Urban areas usually follow FBR rates, while rural or agricultural areas rely on revenue records.
Final Takeaway
FBR’s valuation mechanism for undisclosed immovable property is rule-based, layered, and revenue-protective. Whether it’s urban property, agricultural land, or auctioned assets, the guiding principle is simple: the higher value prevails.
Disclaimer: This article is for general information purposes only and does not constitute legal, tax, or professional advice. The information is based on the Income Tax Rules, 2002 (as amended up to November 24, 2023). Readers are advised to consult a qualified tax advisor or legal professional before making any decisions. The publisher shall not be responsible for any loss or liability arising from the use of this information.