FBR's valuatiion tables applicable to UIPT: Provinces planning to issue notifications for adoption

ISLAMABAD: The provincial governments are planning to issue notifications for adopting the Federal Board of Revenue's valuation tables applicable to Urban Immovable Property Taxes (UIPTs) to raise the assessment values of immovable properties by up to 85 percent of the actual market values.

Sources told Business Recorder Thursday that the upward revision in the valuation tables was the responsibility of the provincial Excise and Taxation Departments and the provincial Finance Departments.

It is expected that the provincial governments will implement the decision by end-April 2021.

The provincial governments are likely to issue necessary notifications by end-April 2021.

According to the sources, nationally the collection of UIPTs falls significantly short of its actual potential.

The current collection is only a fraction of the total urban services provided by the various provincial governments.

The potential collection is undermined by the outdated property valuation tables and outdated annual rental value tables. There is, therefore, a need to update the valuation table to bring them in line with true market values to allow the government to improve their provincial revenue yields.

Sources stated that the provinces had taken various measures in that regard. Several measures are being undertaken, especially in Sindh (under the World Bank's Karachi Urban Management Project) to improve the UIPT revenue yield including updating the valuation tables. Punjab in fiscal year 2020-2021 had postponed its updating of the valuation tables for one year, and is expected to announce the updated valuation tables next fiscal year.

Under the timelines, it is expected that the NFC Coordination Committee approve a policy for how to address the UIPT through the NFC to determine a linkage of annual rental value with the FBR updated property valuation tables.

The provincial governments would also undertake rapid surveys and develop updated annual rental value (ARV) valuation tables in line with the 85 percent of the market value by December 2020.

The government would seek feedback from stakeholders to finalise the valuation table by January 2021, the sources maintained.

It is expected that the governments of the Punjab, Sindh, the Khyber-Pakhtunkhwa, and Balochistan would announce their updated UIPT valuation tables in line with the FBR tables or with 85 percent of the existing market value by end-April 2021, the sources added.

When contacted, a tax expert said that the purchasers of the immovable properties were now required to explain the source of investment of property up to the FBR value of property.

In the past, such purchasers were required to explain the source of investment to the extent of recorded value of property.

But now, the purchasers are required to explain the source of investment of property up to the FBR value of property.

Copyright Business Recorder, 2020