The Federal Tax Ombudsman (FTO) has recently wrapped up its investigation and put forth a recommendation to the Federal Board of Revenue (FBR) regarding the Real Estate sector. In simpler terms, the FTO is advising the tax authority, FBR, to keep a close eye on property prices in the real estate market.
The FTO conducted four investigations on its own initiative, focusing on property valuations in regions including Bahawalpur, Bahawalnagar, Lodhran, and Rahim Yar Khan. These investigations looked into how properties in various categories, such as agricultural land, private housing societies, commercial plots/buildings, and farmhouses, were being valued.
The FTO discovered that the current property valuation process is part of a broader effort called Pakistan Raises Revenue Projects (PRRO), initiated under the guidance of the World Bank to create a standardized valuation table for properties. This process is ongoing and is periodically reviewed by the respective Regional Tax Offices (RTOs).
To streamline property valuation, the FBR introduced SRO1269(I)/2022 on August 1, 2022, based on recommendations from RTO Bahawalpur. These rates were proposed by RTO Bahawalpur in consultation with local revenue authorities to align property valuations with prevailing market rates.
However, there have been instances where District Revenue Authorities faced limitations in revising property valuations beyond a certain percentage, as per the directives of the Punjab Revenue Board.
In response to these challenges, the FTO has advised the FBR, especially the RTO in Bahawalpur, to closely monitor real estate market rates and regularly reassess proposed property rates to ensure they reflect the current market conditions.
Furthermore, the FBR Policy Wing (IR) has been encouraged to promptly adopt any additions and amendments proposed by RTO Bahawalpur in this regard.
In essence, the FTO’s recommendation aims to ensure that property valuations align with the dynamic real estate market, promoting fairness and accuracy in taxation.