As promised back in 2016, the Federal Board of Revenue (FBR) has increased property valuation table rates for real estate across 20 major cities of Pakistan.

This rise, based on another board commitment, will proceed gradually. By increasing table rates by 15% to 25%, the federal authority hopes to raise tax collection from the real estate sector from the existing PKR 50 billion to the PKR 75 billion marks.

THE PREVIOUS PRACTICE

The revised valuation tables have enabled FBR to reduce the disparity between the rates at which a property deal concludes and those notified in the transaction deed. Before the board publicized the valuation tables for the first time in July 2016, property taxes were calculated according to the Deputy Commissioner (DC) rates.

Current DC rates throughout Pakistan are lower by approximately 80% than their concerned properties’ corresponding market rates. This observation comes despite the fact that the rates had been increased by almost 50% two years ago.

THE PRIME MOTIVE

As has been publicly stated, the FBR needed another set of valuation tables to make real estate tax collection more feasible. Many people believe that the main motive behind this revision is to prevent investors from parking their undocumented money into the real estate sector.

According to the estimates shared in certain news reports recently, Pakistan’s real estate sector is worth PKR 7 trillion. In the 2017-18 period, however, the sector contributed only marginally to the national economy with a 0.1% GDP share – by contributing PKR 23 billion in taxes.

THE AMNESTY SCHEME

In order to help stakeholders adjust to the planned tax mechanism for the property sector, the FBR offered an amnesty scheme back in May 2018. Tax evaders throughout the country were encouraged to avail this concession before its term expired, with the threat of legal action in cases of noncompliance.

At the moment, the FBR is in talks with several foreign governments for obtaining details of offshore asset holders. Those who opted not to declare their local and overseas assets have started to receive official notices as a result.

Many economists are hopeful that should the operation be pursued in its true spirit, it will help the country recover trillions of rupees in terms of assets stacked offshore.

THE RECENT RISE

Presently, the FBR is short by PKR 188 billion in terms of the tax target set for the current fiscal year. With the recent rise in valuation table rates, the board intends to increase revenue collection and bring this difference down.

To achieve this goal, the FBR has increased property valuation rates in Islamabad, Karachi, Lahore, Peshawar, Quetta, Rawalpindi, Multan, Hyderabad, Faisalabad, Bahawalpur, Gujranwala, Mardan, Sukkur, Sahiwal, Gujrat, Sialkot, Sargodha, Jhelum, Jhang, and Abbottabad.

The following table will give you a better understanding of the new and old FBR rates applicable in your city:

Lahore Old FBR Rate per marla New FBR rateper marla Percentage rise
Bahria Education & medical City 110,500 132,600 20%
LDA City 165,000 198,000 20%
DHA Phase I 672,000 806,400 20%
DHA Phase II 552,000 662,400 20%
DHA Phase III 552,000 662,400 20%
DHA Phase III Y & Z Block 768,000 921,600 20%
DHA Phase IV 525,525 630,630 20%
DHA Phase V 420,000 504,000 20%
DHA Phase VI 405,000 486,000 20%
DHA Phase VII 321,750 386,000 19.97%
DHA Phase VIII 315,000 378,000 20%
DHA Phase IX & X 225,000 270,000 20%
DHA Rahbar Sector (Sadhoki) 338,000 405,600 20%
Bahria Nasheman (Attu Asal) 132,000 158,400 20%
DHA (Kamahan) 338,000 405,600 20%
DHA (Dulu Khurd) 338,000 405,600 20%
Fazaia Housing Scheme (Janjaty, Chak 62 & Kot Jeevan Mal) 221,000 265,200 20%
State Life Housing Scheme (Kamahan) 286,000 343,200 20%
Central Park 220,000 264,000 20%
Pak Arab Housing Scheme (Chandrai) 440,000 528,000 20%
Ghazi Road (Ferozepur Road to Jhatta Chowk) 880,000 1,056,000 20%
Gajjumatta & adjoining abadis 275,000 330,000 20%
Ferozepur Road (Kot Lakhpat to Gajjumatta) 1,100,000 1,320,000 20%
Gulberg Main Boulevard 1,116,000 1,339,200 20%
Gulberg I, II, III, IV & V 696,000 835,200 20%
DHA (Padri, Bhangali, Chak Bharat & Dhoori 584,000 700,800 20%
Green City 524,000 628,800 20%
Sui Gas Society (Chung Punjgrain) 326,857 392,250 20%
New Lahore City (Sultankay/Sundar) 115,625 138,750 20%
Wapda Town 420,000 504,000 20%
Thokar to Shaukat Khanum Road 510,000 601,200 17.88%
Sui Gas Society (Kamahan) 260,000 312,000 20%
Khayaban-n-Jinnah To Raiwind Road (both sides) 494,000 592,800 20%
Raiwind Road (Thokar Chowk to Bhobatian) 270,125 324,150 20%
NFC Employees Cooperative Housing Scheme 302,150 362,580 20%
LDA Avenue-I 261,500 331,800 26.88%
Johar Town 468,000 561,600 20%
Johar Town (Main Roads) 583,000 699,600 20%
Jubilee Town 274,000 328,800 20%
EME Society 837,500 675,000 -19.40%
Bahria Town 456,000 574,200 25.92%
Paragon City 150,000 180,000 20%

 

Karachi Residential  Residential Commercial Commercial Flats/Apartments
Category Open plot per square yard Built up property per square yard Open plot per square yard Built up property per square yard per  square foot
FBR Rates Old New Old New Old New Old New Old New
A-I 35,000 42,000 40,000 48,000 100,000 120,000 67,500 81,000 5,000 6,000
I 25,000 30,000 32,000 38,400 75,000 90,000 54,000 64,800 45,00 5,400
II 12,000 14,400 20,000 24,000 60,000 72,000 35,000 42,000 2,500 3,000
III 6,000 7,200 11,000 13,200 25,000 30,000 18,000 21,600 1,500 1,800
IV 5,000 6,000 6,000 7,200 19,000 22,800 10,000 12,000 1,000 1,200
V 1,800 2,160 4,000 4,800 4,000 4,800 6,300 7,560 600 720
VI 900 1,080 3,000 3,600 2,000 2,400 4,500 5,400 300 360
VII 20,000 24,000 28,000 33,600 70,000 84,000 40,000 48,000 5,000 6,000
VIII 6,000 7,200 11,000 13,200 25,000 30,000 18,000 21,600 1,500 1,800

 

AreaKarachi Residential Category Commercial Category Flats Category
Bath Island A-I II A-I
Civil Lines A-I I A-I
Clifton Quarters Excluding Shireen Jinnah Colony A-I I A-I
Defence Housing Authority Phase I, II, III & V A-I I A-I
Defence Housing Authority Phase IV & VI A-I I A-I
Defence Housing Authority Phase VII A-I I A-I
Defence Housing Authority Phase VII Extension, Phase VIII & Phase VIII Extension A-I I A-I
Dhoraji Cooperative Housing Society A-I I A-I
Gulshan-e-Iqbal, Block-17 A-I I A-I
K.D.A. Officers Housing Society A-I I I
Muhammad Ali Cooperative Housing Society A-I I A-I
Pakistan Employees Cooperative Housing Society A-I A-I A-I
Abdullah Haroon Road I A-I I
Burns Road I I I
Gulshan-e-Iqbal, Block-7 I I I
I.i. Chundrigar Road I A-I I
M.A Jinnah Road I I I
North Nazimabad (excluding Block  P,Q) I I I
Queens Road Quarters I A-I I
Federal B Area II II III
Gulistan-e-Johar II II III
Gulshan-e-Iqbal Excluding Block-17 II II III
Nazimabad II II II
north nazimabad  block  pqst II II II
Buffer Zone 14-A, 14-A, 15-A-1, 15-AIIM 1 III I III
Bhori Bazar III A-I III
Malir Cantonment III III IV
North Karachi (All Sectors except 1 to 6 ) III III III
Gulshan-e-Hadeed IV IV IV
Landhi Township KDA IV IV IV
Malir City V V V
Orangi Town V V V
Baldia Town VI VI VI
Manghopir  Road & Adjacent Locality VI VI VI
Islamabad Sector Property Type FBR Rates per square yard Percentage rise
Old New
D-12 Residential plots 32,300 38,760 20%
E-7 Residential plots 57,150 68,580 20%
E-11 Residential plots 26,000 31,200 20%
E-12 Residential plots 17,800 18,371 3%
F-6 Residential plots 48,500 58,260 20%
F-7 Residential plots 48,500 58,260 20%
F-8 Residential plots 48,500 58,260 20%
F-10 Residential plots 42,050 50,460 20%
F-11 Residential plots 42,050 50,460 20%
G-6 Residential plots 41,350 49,620 20%
G-7 Residential plots 38,100 45,720 20%
G-8 Residential plots 38,100 45,720 20%
G-9 Residential plots 38,100 45,720 20%
G-10 Residential plots 38,100 45,720 20%
G-11 Residential plots 38,100 45,720 20%
G-13 Residential plots 38,100 45,720 20%
G-14 Residential plots 38,100 40,000 5%
I-8 Residential plots 38,100 45,720 20%
I-9 Residential plots 16,000 19,200 20%
I-10 Residential plots 16,000 19,200 20%
I-11 Residential plots 16,000 19,200 20%
I-12 Residential plots 15,000 18,000 20%
I-14 Residential plots 15,000 18,000 20%
I-15 Residential plots 15,000 8,208 -45%
I-16 Residential plots 15,000 11,479 -23%

WHAT’S NEXT?

The FBR is committed to reducing the difference in property fair market values and real time prices. This naturally calls for a steady increase in rates.

The board previously hinted about increasing the rates gradually in every successive year, but it didn’t revise them back in 2018. In order to compensate for this lapse, many people expect that the authority will reveal a new table of rates in the upcoming 2019-20 budget.

With rates set to increase twice in one year, there is discernible fear in some circles that the move will adversely affect the real estate market. Several property experts are of the opinion that together with a PKR 5 million limit imposed on non-filers, the new FBR rates will make parking black money in the real estate sector even more difficult.

According to an FBR official, the board wants valuation table rates to fall close to 80% of property market values. Currently, the FBR rates read lower by 40% on this metric. Furthermore, the board is looking to remove all signs of this disparity at both the provincial and federal levels.

So simply put, what’s coming next is another rise in valuation table rates and the DC rates. This process of gradual increments will continue until the rates notified by the provincial and federal governments are lower than 20% of an average piece of property’s market value.