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FBR lacks standardized property valuation mechanism: FTO

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1 year ago

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  • Report highlights FBR’s inability to generate substantial revenue.
  • Significant anomalies, inconsistencies, discrepancies were found.
  • FBR says FTO had no jurisdiction over immovable properties.

ISLAMABAD: The Federal Tax Ombudsman (FTO) has revealed the Federal Board of Revenue’s (FBR) failure to devise a standardised property valuation mechanism that aligns with the fair market value, particularly in major urban cities where properties valued at trillions of rupees, reported The News.

This report by the FTO highlights the FBR’s inability to generate substantial revenue in this crucial sector. Moreover, the FTO’s findings also mentioned that the Directorate General Immoveable Property (IMP) was formed in 2018 through a Parliament-approved law, with a specific mandate to tap the real estate sector’s potential, but the office remained non-operational.

The FTO began an independent investigation under Section 9(1) of the FTC Ordinance, 2000, after a comprehensive review of DC rates, various valuation SROs issued by the FBR, and market analysis conducted by the FTC’s research wing.

The research wing found significant anomalies, inconsistencies, infirmities, and discrepancies in valuation tables of immovable properties in SRO 1734(1)12022 dated September 13, 2022. In response, the FBR raised objections regarding the jurisdiction of this office and stated that the office of the FTO had no jurisdiction over the case.

The FTO found glaring discrepancies in valuation rates of fair market value determined by the FBR in the case of Rawalpindi and found that the SRO 1734(1)12022 dated l3thSep 2022 for Rawalpindi district, when compared with the neighbouring ICT Islamabad, appears strikingly deficient, lopsided and sketchy.

For instance, the heart of Rawalpindi city such as the Raja Bazaar, Asghar Mall, Sadiqabad, Pirwadhai as well as other adjoining residential and commercial areas have not even been touched. Most of the residential and commercial locations of Rawalpindi Cantt are also missing like Naseer Abad, Khayaban-e-Sir Syed, Morgah, etc.

Omissions of valuation rates of agricultural lands and Rawalpindi district rural are glaringly visible. Tehsil Taxila is completely missing. Valuation of built-up/constructed area is completely missing. Other tehsils of district Rawalpindi have been marginally touched, especially Murree where at detailed and valuation would be revenue yielding. The Statutory Regulatory Orders (SROs) are plagued with completely unexplainable and insane entries.

The valuation of shops in commercial plazas is altogether different from the valuation of plots. The SRO completely ignored the valuation of shops located in various shopping malls of Tehsil Rawalpindi. While determining the valuation for Askari I to XV, it has been completely ignored that the main features of Askaris are apartments. The valuation of apartments is an altogether different segment, which has not been even touched.

The real estate sector has seen a boom in the recent past from July 2019 onwards as a result of tax amnesties given to this sector (section 100D of the Income Tax Ordinance).

Rawalpindi is host to a large number of approved (by Rawalpindi Development Authority) unapproved/ irregular housing societies/schemes/projects. Among them, some of the renowned builders and developers have launched various projects and the initial prices offered by sponsors/ owners are available in the public domain i.e. on various websites of marketing companies.

The perusal of SRO 1734 reveals that FBR authorities have not bothered to check the publicly available market rates in said schemes/projects while issuing the SRO in question. The FTO has found that no such effort has been made by the FBR nor has the filed formation developed any method, which could be followed by the valuation committees within their jurisdiction.

Besides, there is no standing anomaly committee formed at any level to address the concerns of the stakeholders in case inconsistencies are found or the wrong valuation is made by the committees. Besides, the relevant Directorate General of Immovable Property couldn’t add any value as it remained non-functional.

These omissions led to a lack of a uniform method of valuation, which resulted in inconsistency, inappropriate valuation, undervaluation/overvaluation and arbitrary exercise of powers.

All these lapses constitute maladministration in terms of section 2(3)(i)(b) and (ii) of the FTC Ordinance, 2000. Therefore, corrective measures are required by FBR in the next revised valuation table.

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Business

Dar chairs the CCOP meeting; Blue World’s bid offer of Rs.10 billion is rejected.

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2 days ago

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The Foreign Minister/Deputy Prime Minister chaired the Cabinet Committee on Privatization meeting.

Other committee members who attended the conference included the Federal Secretaries of several Divisions, the Ministers of Finance and Revenue, Industry and Food, Commerce, Power, and Privatization.

The CCOP took the PC Board’s recommendation into consideration and suggested that Blue World’s bid of 10 billion rupees for the sale of 60% of PIACL’s shares be rejected. The bid was rejected by the CCOP, who chose to follow the PC Board’s advice.

The government’s determination to sell out PIACL through government-to-government or privatization was reaffirmed by the CCOP.

The CCOP was pleased with the Aviation Division’s evaluation of PIACL’s sound financial standing.

Additionally, the CCOP established a committee, chaired by the Minister of State for Finance, to assess potential transaction possibilities for the privatization of the Roosevelt Hotel and the appropriate modes of adoption in light of existing legal rules.

Prior to its subsequent meeting, the CCOP also ordered that all difficulties be resolved and an agreement for the selling of services to an international hotel be concluded.

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The KSE-100 Index has surged by 790 points, resulting in an all-time peak for the stock exchange.

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The benchmark KSE-100 Index increased by 790 points, marking a new all-time high for the Pakistan Stock Exchange (PSX) at 94,982 points.

The record-breaking performance underscores a surge of optimism and investor confidence in the stock market.

As investors responded to favorable economic signals, the market experienced a significant increase of over 500 points in early trading. Later, the KSE-100 Index reached another record level of 94,786 points after adding 594 points to its upward trajectory.

This positive development comes as the State Bank of Pakistan’s (SBP) foreign exchange reserves saw an increase of $84 million, reaching $11.26 billion during the week ending November 8, according to data released by the central bank on Thursday.

This represents an increase of 0.75% from the previous week. In addition, the nation’s total liquid foreign reserves experienced a modest increase, increasing by $33.7 million or 0.21% week-on-week to $15.97 billion.

In contrast, commercial banks’ reserves experienced a decline of $50.3 million or 1.06%, ultimately settling at $4.71 billion.

Furthermore, the economic team of Pakistan has expressed confidence in the discussions with the International Monetary Fund (IMF). Minister of State for Finance Ali Pervaiz Malik, in an exclusive conversation with Samaa TV, claimed talks were moving in a positive direction.

Highlighting improvements in Pakistan’s economic conditions, Malik noted substantial progress over the past six months to a year. He emphasized that Pakistan’s current economic situation has seen significant enhancement, with a reduced current account deficit of only $100 million in the first quarter, a reflection of the government’s strategy to increase remittances and boost exports.

Malik shared that discussions with the IMF are primarily focused on external financing, and while there have been speculations about a potential mini-budget or an increase in the petroleum levy, he clarified that these are currently premature considerations.

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Positive IMF negotiations propel KSE-100 Index above 94,000 points

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3 days ago

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As a result of investors’ optimism about the reported progress in the continuing talks with the International Monetary Fund (IMF), the Pakistan Stock Exchange (PSX) experienced a robust surge.

The benchmark KSE-100 Index of the PSX, which tracks market sentiment, rose 713 points to a new record high of 94,068 points, breaking above the 94,000-point barrier, as the trading session began.

Early in the day, the stock market began its upward trajectory as the KSE-100 Index steadily rose, gaining 574 points to reach 93,932 points. A possible agreement with the International Monetary Fund (IMF) might lead to more fiscal stability and back Pakistan’s economic reforms, which is why investors are so optimistic about the country’s future.

Officials from the Federal Board of Revenue (FBR) informed the International Monetary Fund (IMF) on Wednesday that the government would not be introducing a mini-budget and would instead continue to aim to collect Rs12,970 billion in taxes each year.

In line with continuing discussions with the Fund, FBR sources revealed that petroleum goods will not be subject to the General Sales Tax (GST).

The fact that Pakistan’s tax-to-GDP ratio has increased from 8.8% to 10.3%, a 1.5% gain viewed as a favorable sign of Pakistan’s fiscal policies, has reportedly pleased the IMF, who has voiced satisfaction at Pakistan’s recent economic performance.

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