The Federal Board of Revenue (FBR) is set to revise property valuation rates and increase withholding taxes starting from August 1, 2023. Following the recent increase in withholding taxes on the buying and selling of immovable properties from July 1, the FBR will now raise property valuation rates in consultation with provincial authorities by the end of this month. The revised rates will be notified by the FBR, and the number of cities included in the valuation tables will also expand from 42 to 51.
Currently, the FBR’s property valuation rates are applicable in over 40 cities and towns across the country. These rates will now be revised upward by approximately 13 to 15 percent. Additionally, nine new cities/towns will be added to the valuation tables’ list starting August 1, 2023.
Furthermore, as of July 1, 2023, the rates of withholding tax under sections 236C and 236K have been increased. For filers of income tax returns, the rate of withholding tax has been raised from 2 percent to 3 percent under section 236C, while for non-filers, it has been increased from 4 percent to 6 percent. Similarly, under section 236K, the withholding tax rate for filers has been increased from 2 percent to 3 percent, and for non-filers, it has been further raised from 7 percent to 10.5 percent.
These changes are part of the amendments made through the Finance Act 2023 in the rates of advance income tax collected under sections 236C and 236K of the Income Tax Ordinance 2001. According to FBR’s field instructions, the new rates will be 3 percent for filers and 6 percent for non-filers under section 236C, while under section 236K, the rates will be 3 percent for filers and 10.5 percent for non-filers.
These revisions in property valuation rates and withholding taxes aim to align the taxation system with current market values and contribute to the country’s revenue generation efforts. The FBR’s actions reflect its commitment to ensuring a fair and transparent taxation system while addressing fiscal considerations in Pakistan’s evolving real estate landscape.