The government on Tuesday has been further increased Property Valuation Rates Hikes by 30% for 20 major cities of the country. Further bringing them to 85% of the market prices. Its aim is to collect an additional Rs 40 billion from people in a new fiscal year.
Moreover, the rates increases by up to 75% for defined areas of Karachi. The main of them are residential apartments.
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It is the second time for six months that the Pakistan Tehreek-e-Insaf (PTI) government has increased the property valuation rates. In February of this year, the government had also increased the average rate by 20% to 55% of the market value. With a fresh increase rate, the total average increase in valuation rates has come to 50% in the six months, which has been significantly increasing the tax collection.
FBR Notification: (Property Valuation Rates)
The valuation rates, which take effect from today (Wednesday), have been increased for federal tax collection on sale and purchase of land and apartments. The Federal Board of Revenue (FBR) on Tuesday has notified the new rates for 20 cities but pended notification for over six cities.
“The property valuation rates are now around 85% for the fair market value. These rates are after this fresh increased rate.” said by the FBR Member Inland Revenue Policy Dr. Hamid Ateeq Sarwar.
The move is expected to generate an additional Rs40 billion in tax revenues in this fiscal year. But it will disappoint real estate agents and traders. The real estate sector remains sluggish due to the government’s taxation policies. Anyhow, the overall slowdown of the economy and the drive to encourage banking transactions.
IMF Report: (Property Valuation Rates)
“The FBR will also align the value of immovable properties. These aligns made with market rates and specify conditions. The long-term leasehold consider as the purchase of property in new conditions,”
by reading the latest report of the International Monetary Fund (IMF).
The report tells us that the government’s decision to increase the holding period is liable to tax for capital gain tax on immovable properties. Moreover, securities and aligning the value of immovable properties. Furthermore, this alignment is on the market rates generates additional taxes equal to 0.1% of the Gross Domestic Product or Rs 44 billion.
The same report says that the PTI government imposes new taxes at worth Rs733.4 billion. Thus the heaviest taxation by any government in a single year.
Similarly, the government increased the holding period liable to tax for capital gain in the new budget. Which is from 3 to 4 years for the build-up area. But, it is eight years for open plots. The properties sold before the expiry of these limits would be subject to Capital Gains Tax.