LAHORE: The Federal Board of Revenue (FBR) finds itself embroiled in controversy as numerous complaints have been lodged regarding discrepancies and allegations of favoritism in the fixed property valuation rates. This revelation has prompted an investigation into the matter by the Federal Tax Ombudsman, while the Chief Commissioner of Inland Revenue has taken steps to review the rates of main and off-road roads.
Sources said that the Federal Tax Ombudsman (FTO) has received complaints indicating that the FBR staff may have displayed partiality while determining the rates of properties, possibly favoring certain locations. These complaints have raised concerns about the impartiality and transparency of the valuation process.
In response to mounting criticism, the Chief Commissioner of Inland Revenue has issued instructions to conduct a thorough review of the property valuation rates, particularly focusing on main and off-road roads.
One specific allegation that has come to light pertains to the fair market value (FMV) of immovable properties in the district of Sheikhupura. The complainant argues that the valuation of properties in this area was not carried out appropriately but rather in an arbitrary and discretionary manner.
In defense, the department acknowledged that the FBR determined the Fair Market Value in accordance with Section 68(5) of the Income Tax Ordinance 2001, based on a comprehensive survey, without any arbitration involved. However, they acknowledged the possibility of human error and conceded that complaints regarding the valuation of properties in the mentioned serial numbers are currently under review. These complaints have already been forwarded to the review committee of the Valuation of Immovable Property of RTO Lahore.
It is pertinent to mention here that in 2021, FBR decided to revise the valuation of immovable property in 40 major cities. This move faced backlash from realtors, property dealers, and investors, resulting in a slowdown in the real estate market. The FBR increased property valuations to generate more tax revenue and combat issues like tax evasion and inflated values associated with the real estate business.
The problem of undervalued property rates has existed due to a complex system of DC rates, FBR rates, and the actual market rate. These complexities allow for manipulation and tax evasion. Not only that, the undervalued real estate market makes it a parking lot for a huge amount of black money. Upon revision, the FBR jacked up its understated and age-old valuations by as much as 2 to 4 times. The FBR’s property valuation was aimed to bridge the gap between official and market values. However, in some cases, the FBR’s valuation had surpassed market values.
