ISLAMABAD: Even after a long sitting to resolve the issue of property valuation, Federal Board of Revenue (FBR) and property dealers have failed to strike a deal, but agreed to continue discussion today (Friday).
On Thursday, both side remained unable to strike agreement on reconciled determination of fair market value of property for three major cities, including Karachi, Islamabad and Lahore.
The fair market value for these three cities remained bone of contention between the two sides. But the Federation Of Pakistan Chambers Of Commerce & Industry (FPCCI) President Abdul Rauf Alam said that both the sides would evolve consensus on fair market value today.
However, huge differences still exists in determination of fair market value separately worked out by FBR and property dealers in case of three major cities out of total 21, especially for Karachi where declared official value was less than 10 to 15 times compared with fair market value and in some instances the gap widened up to 70 to 100 times depending on location of posh areas of metropolitan areas of Karachi.
The fair market value if agreed by the both sides would be notified by the FBR which could go up by 4 to 5 times.
Special Assistant to PM on Revenues Haroon Akhtar Khan said that the property sector representatives have been asked to come up with fair market value and not come up with wish lists.
FBR Chairman Nisar Muhammad Khan, while talking to media, said that the talks are underway and hopefully both sides will evolve consensus on agreement related to fair market value within this week. After agreement, the government will come up with comprehensive package, he added.
Association of Builders & Developers of Pakistan (ABAD) Vice President Arif Jeewa said that talks were headed towards a settlement. He said that that was a big difference in the market and DC rates but both sides have shown resolve to bridge the difference; however, it should be gradual.
There was no major difference among the FBR and property dealers in case of 18 cities where there was difference in the range of 35 percent. But in case of major cities especially for Karachi and Islamabad, the gap widened up to 60 to 100 times for some areas.
The FBR is empowered to impose tax at rate of 35 percent in case of Rs 10 millions plot of property and with imposition of penalty the tax amount could go up to Rs 7 million out of Rs 10 million plot.
According to FBR, the annual transactions on property stood at Rs6,000 billion to Rs7,000 billion per annum and the FBR’s collection on the basis of collectors’ stamp duty showed that the property transactions were continued in the market as in first 28 days of July and the FBR’s collection on selling and purchasing of property did not decline significantly rather it increased in case of selling property and slightly decreased by Rs10 to Rs15 million in case of purchasing property.
On the basis of fair market value worked out by the FBR, the valuators endorsed 80 percent work done by the FBR as correct and in accordance with market value in three major cities, 15 percent area declared under- valued done by the FBR and 5 percent area over valued by the FBR staff.
The revenue authority’s high-ups argued that the purpose of putting real estate into tax net was not raising money only but it aimed at documentation of black economy as all undocumented money was being invested into this sector.