ISLAMABAD: The government has decided to postpone the planned 30 per cent increase in property valuation rates for federal tax collection purposes.
The average 25% to 30% increase in the property valuation rates for collection of federal taxes under the second phase had to be implemented from July 1, as announced by Finance Minister Ishaq Dar last year. The decision has been deferred until political normalcy returns, said sources in the Federal Board of Revenue (FBR).
Authorities had estimated collecting an additional Rs10 billion due to up to 30% increase in valuation rates during fiscal year 2017-18 that began on July 1. The exchequer will take a hit of about Rs850 million per month due to delay in implementing the decision. The government missed the opportunity when Finance Minister Ishaq Dar decided to postpone the increase in valuation rates from July 1 in order to avoid any backlash from realty investors after the announcement of the budget, said the sources.
They said Dar had indicated implementing the new rates from July 15. The deadline was again missed due to unfavourable circumstances caused by the joint investigation team (JIT) report in the Panama Papers case, they added.
The FBR had notified rates for major cities including Lahore, Multan, Gujranwala, Faisalabad, Sialkot, Islamabad, Karachi, Hyderabad, Sukkur, Sargodha, Mardan, Abbottabad, Peshawar, Quetta and Gwadar. The increase in rates resulted in over 125% enhancement in revenues in the first phase.
Under the constitution, the immovable property is a provincial subject, but the federal government has the right to collect income tax. It collects income tax through withholding taxes and capital gains tax.
