Karachi, January 28, 2025 – The Karachi Tax Bar Association (KTBA) has raised serious concerns regarding the fair market value (FMV) assessment of multi-storied built-up properties in Karachi.
In a formal letter addressed to Dr. Hamid Ateeq Sarwar, the Member for Inland Revenue Operations at the Federal Board of Revenue (FBR), the KTBA emphasized the challenges that have arisen since the FBR issued the Notification SRO 1724(I)/2024 on October 29, 2024. This notification, which was meant to provide clarity on the FMV of immovable properties, has inadvertently led to confusion and operational inefficiencies.
The KTBA revealed that, as a result of this new notification, Sub-Registrars in Karachi have either halted the registration of sale deeds or are refusing to process the documentation for multi-storied residential, commercial, and industrial properties. This delay is primarily due to the difficulty in determining the accurate FMV of these properties under the current regulatory framework, which lacks specific guidelines for properties with more than one story.
KTBA President, Ali A. Rahim, elaborated on the situation, explaining that before the introduction of Notification SRO 1724(I)/2024, the FMV for multi-storied properties was determined under SRO 345(I)/2022, issued on March 2, 2022. Under the previous guidelines, the FMV for built-up properties with multiple stories was determined using a structured formula based on the number of floors. Specifically, residential properties with more than a ground floor saw their FMV increase by 25% for each additional floor. Commercial properties followed a more substantial increase, with a 100% rise in FMV for each additional floor. For industrial properties, the FMV was calculated by adding the plot value to the value of the total covered area across all floors. In cases where a property served multiple purposes, the FMV was derived from the average rate across the various uses.
However, SRO 1724(I)/2024, the latest notification, omits any reference to multi-story properties, leaving a significant gap in the FMV determination process. This omission has caused confusion and inconsistency in the valuation of built-up residential, commercial, and industrial properties, as well as those used for multiple purposes. The absence of clear guidelines has led to differing interpretations by authorities, further complicating the registration process.
The KTBA has urged the FBR to provide an immediate and clear explanation regarding the determination of FMVs for multi-storied properties. Furthermore, the KTBA has recommended that the FBR include practical examples for each category of built-up properties to ensure uniformity and prevent further delays in property transactions. The association hopes that the FBR will address this issue promptly to restore order and facilitate the smooth registration of property documents.