FBR valuation tables 2019 – What’s coming next?

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 mark.

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 publicised 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 rate per 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

Area Karachi	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.