Another round today for valuation of immovable property

The real estate industry representatives on Wednesday presented their proposals to the Federal Board of Revenue (FBR) for amendments in devising the formula for valuation of immovable property and regularisation of past transactions, while tax authorities sought one day’s time to respond to the proposals.

An official source said the proposals were given during talks held between the representative of real estate, builders’ and land developers’ associations. FPCCI President Abdul Rauf Alam led the real estate industry team. Special Assistant to Prime Minister on Revenue Haroon Akhtar Khan and FBR Chairman Nisar Muhammad Khan were also present in the meeting.

Earlier the FBR decided to constitute a 13-member committee comprising representatives of real estate agents builders and land developers to finalise recommendations for revision of the tax regime on the real estate sector including valuation of immovable properties.

The FPCCI president informed media personnel that the issues will be resolved through negotiations without creating any rift with the government. He said the proposals were given and the FBR assured that they would give their feedback on Thursday after assessing them. He said that hopefully, amendment would be made in the law as taking it back was not possible since it had already been approved by the National Assembly.

The real estate representatives said that they have asked the FBR to abstain from implementing the new system of property valuation through independent valuators as it could create difficulties for the industry. They have asked for improving the existing system of valuation through DC rates by gradually enhancing the rates. They stressed that there is no logic behind heavy taxation on the real estate sector already subjected to multiple taxes including withholding tax, capital value tax, capital gains tax and many provincial taxes.

Presently, the value of any property for the purpose of taxation, commercial or residential is quoted as its deputy collector rate. All types of taxes are applied on the deputy collector value of the property. The doubling of withholding tax on buying and selling of immovable properties has been done without taking into confidence the concerned sector, which is opposing the measure tooth and nail. Industry stakeholders say the measure relating to capital gains tax will also hurt investments in the real estate sector.