ISLAMABAD: A parliamentary panel on Monday ordered withdrawal of 100-700 per cent increase in valuation of immovable properties in the country’s 40 urban centres for the purpose of tax collection notified by the Federal Board of Revenue (FBR) on Dec 1.
On the basis of observations of the senators and protest by real estate stakeholders, Senator Talha Mahmood of JUI while presiding over the meeting of the Senate Standing Committee on Finance and Revenue also directed the FBR to come up with a revised valuation table in consultation with all the stakeholders within 15 days.
He said it was inappropriate on part of the revenue authorities to take steps without taking relevant stakeholders in confidence and such policies were neither in the interest of the businesses nor the FBR itself. He said business transactions required time to materialise and hence there should also be a mechanism and time frame under which the deals finalised before the new SRO remain unaffected.
The decision-making should be based on involvement of stakeholders but economic improvement and revenue growth could not be expected when there was trust deficit between the government agencies and the stakeholders.
The committee directed that during the consultation process for a new mechanism, previous regulation and arrangements should be put in place so that businesses can run as usual. For all the future regulations the FBR should provide ample time to the industry for compliance and adjust their businesses accordingly.
FBR Chairman Dr Ashfaq Ahmad told the committee that the objective of the revised valuation of the properties was to gradually tax immovable properties on the basis of market prices. He said until few years ago there was no proper system of real valuation of properties and the provinces were not ready to reach a consensus. Therefore, the FBR was entrusted with the responsibility. He said the property prices set for the first time during the government of PML-N and a tax amnesty scheme was also offered on the basis of these prices.
He said the FBR had set best possible property evaluation in the given circumstances but there was still possibility that valuations for some areas may be higher or lower and hence the FBR was ready to review these valuation tables.
Senator Kamil Ali Agha of PML-Q said there was no proper mechanism for property valuations but it was not possible for the parliament to rubber stamp whatever the government comes up with.
He suggested that there should be some formula and independent assessment of values to ensure a fair property valuation and resultant taxation.
Senator Saleem Mandviwalla observed that some way forward should be looked into instead of criticising the tax machinery. He said the FBR had been setting values of properties since the PPP tenure and there was a need for a national consensus on the subject.
Senator Faisal Sabzwari of MQM said the committee did not want to destroy the property business but also could not allow black money to be invested in the property market.
The representatives of property dealers and Rawalpindi and Islamabad Chambers of Commerce and Industries said the FBR had imposed new valuation tables without taking them into confidence and all of a sudden, resulting in a complete halt on property transactions. They said the people had signed sale purchase contracts but were shocked at the time of transfer that their tax rates had increased by 100 to 700pc.
They also pointed out that no transaction could be actualised since the SROs were issued on Dec 1 and some property valuations were so absurd that the customers were ready to sell their assets at less than half the evaluated price to the government.