Pakistan is underperforming in the economy and its regional peers resulting in turning the country to the International Monetary Fund (IMF) for balance of payment problems. To secure the bailout package, the Pakistan delegation needs to convince the IMF about the recovery of payment. Now FBR is active and intends to include the real estate sector in the tax net to earn more.
According to the World Bank, Pakistan’s real estate sector has the potential of creating 600 to 700 bn Rs annually. FBR raises property valuation by up to 80% which will impact the tax amount on the sale and purchase of real estate units for investors. Right now the new policy is implemented in 56 major cities excluding Lahore, Karachi, and Islamabad.
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What Will be the Impact of Raising Property Valuation by FBR?
It will impact the tax calculation by the government bodies. Usually, tax on a real estate unit is based on its market value which is always higher than the government fixed rate. When the property value increases in the system of government and comes closer to market rates it will boost revenue collection. It will also help the governing body to redirect the investment into more productive sectors or reach the target set by the IMF.
FBR Chairman Rashid Mahmood Langiral added that for price valuation different parameters like type of property, its location, and other variables will be used.
What is the Target Amount to be Collected Through Property Valuation Raise?
FBR has revised tax rules four times already in 2018, 2019, 2021 and 22. Under sections 236C, 236K, and 7E of the income tax Ordinance, FBR levies taxes. Remember, the government is already taking a 5 percent federal excise duty on property transactions.
By using sections 236C and 236K, FBR collected 150 billion in income tax. During this year, the government is trying to reach the goal of 300 bn. Previously there were 44 cities included in the valuation property raise list that have been piled up more and touched 56 cities.
When Will the New Valuation Property Policy Take Effect?
From 1st November 2024, the new valuation property raise will be active in 56 cities to collect revenue to meet the 300 billion Rs target.
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