Earlier in January this year, the Federal Board of Revenue issued new valuation tables for many societies in localities of six major cities; Karachi, Islamabad, Lahore, Peshawar, Faisalabad and Rawalpindi. In these tables, fair market value of property for the purpose of collecting Capital Gain Tax and Advance Tax (also known as Withholding Tax) were reduced as much as by 57%, allowing many inactive investors to get out of the idle mode.
Areas and societies with lower valuable rates
According to the new tables, rates were lowered only a few societies and localities of the mentioned cities. Here are the details:
| City | Locality/area/type | Valuation rates (revised) | Reduced by |
| Karachi | Industrial plot | PKR 9,603 per yard2 | 20% |
| Built-up industrial park | PKR 1,905 per yard2 | 36.5% | |
| DHA City | PKR 7,500 per yard2 | 17.5% | |
| Lahore | EME Society | PKR 562,500 per marla | 32.8% |
| Gujjar Pura China Scheme | PKR 363,000 per marla | 51.5% | |
| Anmol Cooperative Housing Society | PKR 237,500 per marla | 38.3% | |
| Attari Saroba & adjoining abadis | PKR 275,500 per marla | 37.4% | |
| Mouza Bahlar | PKR 190,000 per marla | 14% | |
| Mouza Dev Khurd Kalan | PKR 200,000 per marla | 4.3% | |
| Islamabad | E-12 | PKR 15,309 per yard2 | 14% |
| I-15 | PKR 6,840 per yard2 | 54.4% | |
| I-16 | PKR 9,566 per yard2 | 36.2% | |
| Rawalpindi | Defence Housing Authority (DHA) Phase I | PKR 335,000 per marla | 39% |
| DHA Phase II | PKR 255,000 per marla | 37.5% | |
| DHA Phase II Extension | PKR 95,000 per marla | 45.7% | |
| DHA Phase III | PKR 90,000 per marla | 40% | |
| DHA Phase IV | PKR 110,000 per marla | 51.1% | |
| DHA Phase V | PKR 168,000 per marla | 32.8% | |
| Bahria Town Phase I | PKR 280,000 per marla | 25.3% | |
| Bahria Town Phase I Extension | PKR 165,000 per marla | 56% | |
| Bahria Town Phase II | PKR 160,000 per marla | 54.2% | |
| Bahria Town Phase II Extension | PKR 150,000 per marla | 57.2% | |
| Executive Meadows (Bahria Town) | PKR 270,000 per marla | 55% | |
| Peshawar | Hayatabad | PKR 540,000 per marla | 42.3% |
| Faisalabad | Eden Orchard | PKR 375,000 per marla | 14.3% |
The table shared above shows that revised rates for Rawalpindi are not only prominent, the revision is done for the projects that still are ripe for investment. But before we share more details on how that impacts the investment choice you make, let’s find out how the market responded to this reduction.
The impact
The most prominent and immediate impact of reduction in valuation tables was noticed for DHA City Karachi as an instant rise was recorded in the property transaction volume for this project as soon as the new notification was issued. According to our sources, the revision in valuation rates for DHA City made the fair market value of 1-kanal residential plot lower than PKR 4 million as properties worth less than PKR 4 million are exempted from Advance Tax.
Similar reports have been received from Islamabad, where demand is picking up for properties in DHA Phase V. But for the CDA sectors, rates for which were also lowered, the impact is not evident as the main reason behind their poor demand is mainly the uncertainty about initiation of development, according to our sources.
If you look closely at the localities in Lahore where FBR reduced valuation tables, you will also notice that rates are reduced for mouzas that fall in DHA Phase IX and Phase X, while the other localities are the saturated ones, which already aren’t deemed rewarding for investment.
For localities falling in Rawalpindi’s jurisdiction, the impact is yet to be witnessed because many investors here are currently more interest in societies located in Zone II. We believe that the revision in valuation tables are more promising for the societies in Rawalpindi the FBR here has lowered fair market value of property in almost all prime phases of Bahria Town and DHA.
Why focus on Rawalpindi?
Under the new rates, the fair market value of 1-kanal residential plots in DHA Phase II Extension, Phase III, Phase IV and Phase V becomes lower than PKR 4 million, which means no advance tax on it. Similarly, if you invest in Bahria Town Phase I Extension, Phase II and Phase II Extension, you will not be paying any Advance Tax, which is 2% for the tax filers and 4% for the non-filers.
In other words, if you invest in DHA Phase V, you can save PKR 67,200 as a tax filer and PKR 134,400 as a non-filer. And not to mention, if you hold this investment for three years, you will also be exempted from Capital Gains Tax.
Wait up for our next blog on how much tax you pay if you purchase plot in select few phases of DHA or Bahria Town Rawalpindi. In the meanwhile, you can make your plan according to the information shared in this blog.
If you have feedback on the blog or any comments for us, let us know through comments. You can also discuss the subject with property experts on Zameen Forum by starting a new thread.
No comments:
Post a Comment