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Tag: fair market

  • FBR defines fair market value of immovable properties, motor vehicles

    FBR defines fair market value of immovable properties, motor vehicles

    KARACHI: Federal Board of Revenue (FBR) has defined fair market value of immovable properties and motor vehicles in case of undeclared assets identified.

    FBR officials said that the valuation of immovable property for the purposes of section 111 of Income Tax Ordinance, 2001 related to undisclosed assets shall be taken to be-

    (a) the fair market value of immovable property shall be the value notified by the Board under sub-section (4) of section 68, in respect of area or areas specified in the said notifications;

    (b) if the fair market value of any immovable property of any area or areas has not been determined by the Board in the notification referred to in sub-section (4) of section 68, the fair market value of such immovable property shall be deemed to be the value fixed by the District Officer (Revenue) or provincial or any other authority authorized in this behalf for the purposes of stamp duty; and

    (c) in the case of agricultural land, the value shall be equal to the average sale price of the sales recorded in the revenue record of the estate in which the land is situated for the relevant period or time;

    (d) if in a case sale price recorded in the instrument of sale of any property is higher than the fair market value as determined under clauses (a), (b) and (c), the applicable price shall be higher of the two; and

    (e) in the case of sale price of any auctioned property or the fair market value as determined under clauses (a), (b) and (c), the higher price shall be applicable.

    (2) For the purposes of section 111 and subject to sub-rule (2), the value of motor cars and jeeps shall be determined in the following manner, namely:-

    (a) the value of the new imported car or jeep shall be the C.I.F. value of such car or the jeep, as the case may be, plus the amount of all charges, customs-duty, sales tax, levies, octroi fees and other duties and taxes leviable thereon and the costs incurred till its registration;

    (b) the value of a new car or jeep purchased from the manufacturer or assembler or dealer in Pakistan, shall be the price paid by the purchaser, including the amount of all charges, customs-duty, sales tax and other taxes, levies, octroi, fees and all other duties and taxes leviable thereon and the costs incurred till its registration;

    (c) the value of used car or jeep imported into Pakistan shall be the import price adopted by the customs authorities for the purposes of levy of customs-duty plus freight, insurance and all other charges, sales tax, levies octroi, fees and other duties and taxes leviable thereon and the costs incurred till its registration;

    (d) the value of a car or jeep specified in clause (a), (b) and (c) at the time of its acquisition shall be the value computed in the manner specified in the clause (a), (b) or (c), as the case may be, as reduced by a sum equal to ten percent of the said clause for each successive year, upto a maximum of five years; or

    (e) the value of a used car or jeep purchased by an assessee locally shall be taken to be the original cost of the car or the jeep determined in the manner specified in clause (a), (b) or (c), as the case may be, as reduced by an amount equal to ten percent for every year following the year in which it was imported or purchased from a manufacturer.

    (3) In no case shall the value be determined at an amount less than fifty percent of the value determined in accordance with clause (a), (b) or (c) or the purchase price whichever is more.

    (4) For the purposes of section 61, the value of any property donated to a non-profit organization shall be determined in the following manner, namely:-

    (a) the value of articles or goods imported into Pakistan shall be the value determined for the purposes of levy of customs duty and the amount of such duty and sales tax, levies, fees, octroi and other duties, taxes or charges leviable thereon and paid by the donor;

    (b) the value of articles and goods manufactured in Pakistan shall be the price as recorded in the purchase vouchers and the taxes, levies and charges leviable thereon and paid by the donor;

    (c) the value of articles and goods which have been previously used in Pakistan and in respect of which depreciation has been allowed, the written down value, on the relevant date as determined by the Commissioner;

    (d) the value of a motor vehicle shall be the value as determined in accordance with rule; and

    (e) the value of articles or goods other than those specified above, shall be the fair market value as determined by the Commissioner.

  • FBR monitors immovable property transactions to enforce fair market values

    FBR monitors immovable property transactions to enforce fair market values

    KARACHI: Federal Board of Revenue (FBR) is monitoring transactions of immovable properties to check sales and purchases on fair market value, sources told PkRevenue.com.

    The sources said that the FBR had reduced the withholding tax rate to one percent from July 01, 2019 to be collected from purchaser of immovable properties. However, this rate should be two percent in case the buyer is not listed on the Active Taxpayers List (ATL).

    The sources said that the tax offices had been asked to monitor the transaction of immovable properties under the new rates with true declaration of amount.

    The sources said that the FBR was fully aware about the size of undeclared money invested in the real estate business. Therefore, the monitoring was started. However, comprehensive data of buyers and sellers will be provided by withholding agents to the FBR by January 31, 2020.

    The sources said that the withholding agents for immovable transactions are those persons registering, recording or attesting or transfer including local authorities, housing authorities, Housing Society, Co-operative Society and registrar or properties.

    They said that tax offices would start massive crackdown after receiving the data from withholding agents.

    They said that people were not declaring true values of immovable properties at the time of registration or transfer, which was causing massive loss to national exchequer.

    They further said that by concealing the true amount, buyers and sellers were also promoting black economy.

    The sources said that withholding agents would provide details of buyers and sellers, including names, addresses, CNICs, declared value and amount of tax withheld.

    The FBR sources the tax authorities would examine the mode of payment and compare the declared value with the prices prevailed in the open market.

    They said that after conducting examination the tax authorities would ask buyers and sellers of immovable properties to file income tax returns, in case those persons were not in the tax net.

  • Determination of fair market value explained

    Determination of fair market value explained

    KARACHI: The fair market value of assets shall be the value of property in open market at the time of purchase, sources in Federal Board of Revenue (FBR) said.

    The FBR sources said that Section 68 of Income Tax Ordinance, 2001 explained the methodology for determining the fair market value.

    Section 68: Fair market value

    Sub-Section (1): For the purposes of this Ordinance, the fair market value of any property or rent, asset, service, benefit or perquisite at a particular time shall be the price which the property 2[or rent], asset, service, benefit or perquisite would ordinarily fetch on sale or supply in the open market at that time.

    Sub-Section (2): The fair market value of any property or rent, asset, service, benefit or perquisite shall be determined without regard to any restriction on transfer or to the fact that it is not otherwise convertible to cash.

    Sub-Section (3): Where the price “other than the price of immoveable property” referred to in sub-section (1) is not ordinarily ascertainable, such price may be determined by the Commissioner.

    Sub-Section (4): Notwithstanding anything contained in sub-sections (1) and (3), the Board may, from time to time, by notification in the official Gazette, determine the fair market value of immovable property of the area or areas as may be specified in the notification.

    Sub-Section (5): Where the fair market value of any immovable property of an area or areas has not been determined by the Board in the notification referred to in sub-section (4), the fair market value of such immovable property shall be deemed to be the value fixed by the District Officer (Revenue) or provincial or any other authority authorized in this behalf for the purposes of stamp duty.

    (6) In respect of immovable property—

    (i) component A of the formula in sub-section (2) of section 37;

    (ii) consideration received as mentioned in Division X of Part IV of First Schedule;

    (iii) value of immovable property as mentioned in Divisions XVIII of Part IV of the First Schedule; and

    (iv) valuation for the purposes of section 111,shall not be less than the fair market value as determined under sub-section (4) or (5).

    Explanation.—(1)For the removal of doubt, it is clarified that the fair market value as determined under sub-section (4) or(5) shall be for carrying out the purposes of this Ordinance only.

    (2) It is further clarified that for the purposes of clauses (i) to (iv) of this sub-section if the fair market value determined under sub-section (4) or (5) is different than the auction price the applicable price shall be the higher of the two.

  • Advance tax on purchase of immovable property to be paid on fair market value

    Advance tax on purchase of immovable property to be paid on fair market value

    KARACHI: Federal Board of Revenue (FBR) will collect advance income tax on sale of immovable properties on the basis of fair market value.

    Sources in FBR said that the purchaser of immovable property shall make payment of advance tax income tax on the amount determined at fair market value not on the DC value or valuation tables notified by the FBR.

    Under Section 236K of Income Tax Ordinance, 2001, advance tax on purchase or transfer of immovable property.

    (1) Any person responsible for registering, recording or attesting transfer of any immovable property shall at the time of registering, recording or attesting the transfer shall collect from the purchaser or transferee advance tax at the rate specified in Division XVIII of Part IV of the First Schedule.

    Explanation,—For removal of doubt, it is clarified that the person responsible for registering, recording or attesting transfer includes person responsible for registering, recording or attesting transfer for local authority, housing authority, housing society, co-operative society and registrar of properties.

    (2)The advance tax collected under sub-section (1) shall be adjustable.

    (3) Any person responsible for collecting payments in installments for purchase or allotment of any immovable property where the transfer is to be effected after making payment of all installments, shall at the time of collecting installments collect from the allotee or transferee advance tax at the rate specified in Division XVIII of Part IV of the First Schedule.

    (4) Nothing contained in this section shall apply to a scheme introduced by the Federal Government, or Provincial Government or an Authority established under a Federal or Provincial law for expatriate Pakistanis:

    “Provided that the mode of payment by the expatriate Pakistanis in the said scheme or schemes shall be in the foreign exchange remitted from outside Pakistan through normal banking channels.”

    The rate of tax to be collected under section 236K shall be 1 percent of the fair market value from a person appeared on Active Taxpayers List (ATL). The rate shall be at two percent of the fair market value from persons not appearing on the ATL.