ISLAMABAD: The Federal Board of Revenue’s (FBR) efforts to bring developers and builders, especially new housing societies into the tax net have failed to achieve the desired results, reported by leading business website Business Recorder on Wednesday.
According to the report, it is learnt that the FBR was expected to issue increased values of immovable properties from July 1, 2024, as the leading tax collection body has started the process of updating valuation tables of properties across the country in consultation with the provincial authorities.
According to the report, quoting sources the FBR was required to fix the values of the new housing societies as the last valuation of immovable properties was completed in March 2022. The new rates of immovable properties across the country have not been increased in the last two years in the context of the commitment of the FBR to bring new housing societies into the tax net.
The FBR had temporarily suspended an enhancement proposed in the valuation of immovable properties till September 2023 as FBR and the real estate sector agreed that FBR for the time being would not issue enhanced values of immovable properties in August 2023.
The committees were formed in each city to examine the new values in consultation with the respective associations of the real estate sector. Later, builders and developers coordinated with the regional tax offices to finalise their values with new rates being communicated to the FBR. However, there is no further development on the most awaited issue.
It is expected that the new rates of the immovable properties will be notified in June 2024 for their applicability from July 1, 2024.
FTO Directions to FBR
Meanwhile, the Federal Tax Ombudsman (FTO) had directed FBR that the housing schemes in posh areas must be valued on a real-time basis to implement precise and accurate valuation tables of immovable properties.
The FBR had received directions from the FTO that the valuation table must include the cost of the built-up structure and the housing schemes in these areas may be valued on a real-time basis.
Several residential schemes announced by real estate developers have still not been included in the valuation table.
In addition, the FTO office found that a lack of uniform standards resulted in inconsistencies and anomalies in determining fair market value. Three main approaches should have been utilized while determining fair market value namely, cost-based approach, comparison approach and income capitalisation approach.
AS there were no SOPs available, therefore, the FBR authorities were advised to take guidance from International Valuation Standards (IVS) formulated by the International Valuation Standards Council (IVSC) which are generally accepted across the world as follows: Valuation Standards should be principles-based and adequately address nature of the immovable property. Standards are to be created and revised, when necessary, by way of a transparent process after appropriate exposure.
Besides, valuers must follow principles of integrity, objectivity, impartiality, confidentiality, competence and professionalism while determining the valuation of properties, the FTO report stated.
