Proper property assessment is crucial for taxes and money. An urgent problem was raised by the Federal Tax Ombudsman (FTO). Pakistan’s Federal Board of Revenue (FBR) has struggled to unify property appraisal to fair market value. This difficulty is particularly visible in big metropolitan centers with trillion-rupee estates.
Discuss this problem and its impact on Pakistan’s real estate business.
Due to this valuation issue, the FBR cannot produce significant real estate income, according to the FTO’s assessment. In 2018, Parliament created the Directorate General of Immovable Property (IMP), adding to the confusion. This office was charged with maximizing real estate’s potential. However, it remains inoperable.
The FTO launched an independent inquiry to find the cause. They examined District Collector (DC) rates, FBR valuation Statutory Regulatory Orders (SROs), and market studies with the FTO’s research wing.
The investigation found abnormalities, inconsistencies, infirmities, and discrepancies in immovable property assessment tables, notably in SRO 1734(1)12022 dated September 13, 2022.
The differences in fair market value between Rawalpindi and Islamabad are obvious. The assessment excludes Raja Bazaar, Asghar Mall, Sadiqabad, Pirwadhai, and other important Rawalpindi districts. Rawalpindi Cantt residential and commercial areas including Naseer Abad, Khayaban-e-Sir Syed, Morgah, and others are absent.
Agricultural lands, rural Rawalpindi, and Tehsil Taxila were excluded. Even construction values are lacking. Unexplained and contradictory SRO entries add to the perplexity.
Since July 2019, tax amnesties have boosted Pakistan’s real estate industry. Rawalpindi has several authorized and unapproved housing developments. Famous builders and developers have released their first costs for their projects.
SRO 1734 shows that FBR officials ignored publicly known market prices in these projects. The lack of a unified valuation system leads to inconsistency and arbitrary power use.
Without a conventional property valuation process, undervaluation and overvaluation occur. The FTO has noted these concerns and called for fixes. This is necessary for property appraisal fairness and transparency.