The new rates will determine how much tax you pay
The Sindh government has been legislating to align its property rates in Karachi, Hyderabad and Sukkur with the valuation table issued by the Federal Board of Revenue, Sindh Chief Minister Murad Ali Shah said Friday.
The chief minister announced this at a meeting with World Bank Country Director Mr Najy Binhussin through a video link from CM House.
In July 2019, the FBR issued valuation tables for 21 Pakistani cities, including the three Sindh cities, for Capital Gains Tax collection. These tables specify the rates at which property tax is charged.
The valuation tables for Karachi, Hyderabad and Sukkur were being aligned with the FBR tables, CM Shah said. The revision will affect the tax paid on properties in these cities.
There are two types of taxes that you pay on property transactions: federal and provincial. These taxes are further divided into more categories. Federal taxes include Capital Gains Tax (charged on selling property) and Advance Tax (charged on buying property).
Provincial taxes include Capital Value Tax, registration fee and stamp duty (all three applicable on buying property). These taxes are charged on the minimum property rate, which has been set by the FBR. The valuation rates differ from area to area and the type of property you own, such as a residential open plot, residential built-up property, commercial open plot, commercial built-up property, industrial open plot and built-up property, flats or apartments. You can find the details on the FBR’s website.
The FBR’s revised valuations came after the IMF and FATF called Pakistan’s real estate business a system to turn people’s black money into white. Karachi, Hyderabad and Sukkur were part of the revised valuation tables, but rates of the federal and Sindh governments were different. These rates are now being aligned.
About resilient institutions for sustainable economy, the chief minister said that Sindh has been one of the first provinces to prepare a draft Fiscal Responsibility Legislation. It includes Medium-Term Fiscal Framework (MTFF) and update of the MTFF periodically during the year, limits on growth of expenditure and on fiscal deficit, he said. The draft legislation has been tabled in the assembly.
On the issue of encroachments, CM Shah said that a Resettlement and Rehabilitation Framework would be developed before removing the encroachments in the province.
The meeting discussed different Karachi projects launched with the assistance of World Bank to review their progress and streamline their funding.