As per the recent development by the Federal Board of Revenue Pakistan, the property valuation rates have been increased up to 80%. The new rates of property valuation shall be applicable in 56 cities across the country and are to be in effect from 1st November 2024.
According to official sources, the decision to revise and impose new rates of property valuation has come forward in an effort to align the property rates with that of the market value.
As for the response from the key stakeholders in the real estate market, the FBR land valuation has spread a wave of concern as it shall serve as discouragement and further decline in the real estate sector.
FBR Property Valuation Rates & Impact on Housing Societies
FBR Property Valuation rates 2024 are to be implemented across 56 cities, in general. The cities in which the new rates of an immovable shall be implemented as per the FBR land valuation induce the following and some others:
| Islamabad | Kasur | Toba Tek Singh | Sheikhupura |
| Gujranwala | Khushab | Peshawar | Rahim Yar Khan |
| Dera Ismail Khan | Hafiz Abad | Sargodha | Multan |
| Dera Ghazi Khan | Ghotki | Mandi bahauddin | Mirpur Khas |
| Chakwal | Karachi | Sukkur | Narowal |
| Faisalabad | Gwadar | Quetta | Lodhran |
| Bahawalpur | Jhung | Rawalpindi | Sahiwal |
| Abbottabad | Haripur | Mardan | Larkana |
| Attock | Hyderabad | Mansehra | Lasbela |
| Jhelum | Gujrat | Lahore | Sialkot |
| Bannu | Chiniot | Ghora Gali | Kotli Sattian |
| Nankana |
Note: As per the orders from the Federal Ombudsman, the Federal Board of Revenue has been directed to implement the new rates from 1st November 2024.
The New FBR property valuation rates shall be implemented on immovable property in multiple cities. It shall also create a cascading impact on various residential as well as commercial projects in the country.
The actual impact will definitely be obvious within a certain period. However, one thing’s for sure, the housing societies in cities like Islamabad, Rawalpindi, Lahore, Karachi, Peshawar will be impacted the most.
New FBR Property Valuation Rates Islamabad
The prominent effect of the new property valuation rates is expected to be on housing societies in Islamabad. The capital being the emerging hub of residential and commercial projects, such as Blue World City, Faisal Town, Capital Smart City, and many others, plays an integral part in the growth of real estate in Pakistan.
However, heavy taxes and the new FBR rates of property shall impact and discourage buying as well as selling by the customers. To keep the sector growing in the largest hub, the government needs to provide some relief measures in terms of affordability for the common man.
New FBR Property Valuation Rates Lahore
New FBR Property valuation rates shall also have a huge impact on the provincial capital. Lahore being the industrial hub of the largest province, is home to numerous projects yielding commercial space for business and affordable residences for living.
The societies such as Lahore Smart City, Bahria Town Lahore, New City Paradise Lahore, and many others have been the core of national as well as global investments. However, the new property rates by FBR shall also impact the purchasability of the citizens leading to a down trend.
New FBR Property Valuation Rates for Karachi
Also, the FBR has also revised property valuation rates for the country’s largest district, Karachi. The new property valuation rates in the Karachi district range from Rs. 400 per square foot to Rs. 55,000 per square foot across various parts of the city.
Property Taxes In New FBR Immovable Property Valuation
The valuation of immovable properties has also been coupled with new District Collector (DC) rates for various cities. As per the development, the new FBR property rates have been applied under various sections of the Income Tax Ordinance, mainly 236C and 236K. The new property valuations shall be implemented in the form of the following federal taxes:
- Capital Gain Tax
- Withholding Tax
- Federal Excise Duty (5%)
Key Factors Behind New FBR Property Valuation
Additionally, the main driver behind the decision is the impending IMF program. The Federal Government was subject to collect pre-conditioned revenue in the part of taxes, however, failure to collect a substantial number of taxes to avail the IMF program, the government has come forward with increasing taxes for the country’s highest taxable sector, i.e., the real estate sector.
As per the global financing institution, Pakistan’s real estate sector can generate tax revenue of around 600 billion to 700 billion. However, the government could collect 200bn, significantly lower than the actual potential.
Final Words
The updated property valuation rates apply to immovable properties of various types as residential, commercial as well as industrial properties. This development also brings another wave of concern for property buyers as well as sellers, resulting in ultimately declining investments in the real estate sector.
Also, the heavy property taxes and FBR property valuation in Pakistan have also been contributing to capital flight and investors’ interest to shift to international markets such as UAE, Malaysia, Singapore, and others. All of this eventually adds up to weaken Pakistan’s real estate sector.
