No reversal of policy on real estate valuation, says FBR
Federal Board of Revenue (FBR) has taken strong exception to news reports appearing in a section of the press claiming the downward revision of real estate valuation for some areas has partially reversed the policy decision taken in 2016 for adoption of market value of real estate for the purposes of collection of Federal taxes.
In an official statement, FBR has asserted that there is no deviation or reversal of the policy to revise the FBR rates in phases and make them equal to the market rate in a reasonable period. The revision of rates in six cities is meant only to remove the anomalies in the existing valuation tables.
FBR rates for immovable properties were notified in August 2016. Before notifying the rates, the fair market value of all the areas was determined. Thereafter, the FBR rates were fixed after consultation with the stake holders. The overall average of FBR rates were fixed at a certain percentage of the fair market value with the intention to take the FBR rates equal to the fair market value gradually over a reasonable period of time.
Various representations/complaints were received regarding anomalies in valuation tables of FBR. It was reported that FBR rates in some areas are higher than the approximate overall average percentage of the fair market value and in some areas even higher than 100% of the fair market value. In this regard, FBR also held various meetings with the stakeholders to remove the anomalies. The anomalies pointed out were of two main categories which are as under:-
i. The FBR rate in some areas was fixed much higher than the overall average percentage of the fair market value and in some cases even higher than the fair market value.
ii. The FBR rate as percentage of fair market value was higher when compared with a similar comparable location.
Accordingly, the FBR rates for specified areas have been revised to remove the above anomalies. It is pertinent to mention that the revision of FBR valuation tables is meant to redress the genuine grievances of the stakeholders so that FBR rates of all areas remain at a certain percentage of the fair market value and there is no anomaly in fixation of the fair market value between comparable areas.