The Federal Board of Revenue (FBR) is set to introduce a significant increase in property valuation, raising rates by up to 75% across the country in a move aimed at bolstering the nation’s tax revenue.
This adjustment in property valuation will impact 42 major cities, where revised pricing structures have already been finalized, as per FBR sources. The revision of these property valuations is crucial for improving tax collection and aligning property prices closer to their fair market values.
A formal notification regarding the new property valuations is expected to be issued shortly. The revised rates have been determined based on multiple factors, including fair market value and the geographical location of the properties. This measure is part of the FBR’s broader strategy to ensure that real estate taxes reflect accurate and fair market conditions, ultimately contributing to increased revenue for the national exchequer.
In its next phase, the FBR plans to expand this property revaluation initiative to an additional 15 cities. These measures are being implemented following a stern warning issued by FBR Chairman Rashid Langrial.
He cautioned that large-scale action against non-filers will begin after November 1, 2024 marking a critical point in the government’s tax enforcement campaign. During a media interaction in Islamabad, Rashid Langrial revealed that over four million income tax returns have been filed, a dramatic increase compared to last year’s figures, which points to growing compliance.
“There will be no extension in the deadline for submitting income tax returns,” Rashid Langrial emphasized. The final deadline for tax submissions remains October 14. He further added, “We have comprehensive data on non-filers, and large-scale action will begin in November. The Prime Minister Shenbaz Sharif has directed that no tax evader be spared in this crackdown.”
To further tighten the noose around tax defaulters, the FBR has decided to impose 15 key restrictions on non-filers. These restrictions will initially be applied to critical areas such as property transactions, vehicle purchases, international travel, opening current accounts, and investments in mutual funds. The removal of the non-filer category signals the government’s firm stance on tax compliance, with the goal of encouraging greater accountability and transparency.
Meanwhile, Finance Minister Muhammad Aurangzeb, speaking earlier, stated that there is immense potential for improving tax collection in various sectors. He highlighted that the country is currently losing Rs 3,400 billion due to tax evasion and fraud. Aurangzeb outlined specific sectors where tax underreporting is rampant, including the cement sector, which could yield an additional Rs18 billion in taxes, and the battery and beverage sectors, each contributing a shortfall of Rs11 billion.
The Finance Minister further noted that only 14% of the 300,000 manufacturers in the country are registered with the FBR, leaving a significant gap in tax coverage. In the textile weaving sector, the shortfall reaches Rs18 billion, while in the iron and steel sector, the losses amount to Rs29 billion due to excessive input tax claims. He also highlighted serious concerns about the scale of sales tax fraud in large corporations, particularly in the steel and cement industries.
The recent findings disclosed by the FBR indicate that companies have been fraudulently claiming up to 25% of their total sales in input tax adjustments, even though the benchmark rates range between just 4% and 7%. Despite the potential to collect Rs6.5 trillion in sales tax, the FBR has only managed to gather Rs 3.1 trillion, illustrating the vast scope of tax fraud in various industries.
Aurangzeb emphasized the severity of sales tax fraud, noting that it is a criminal offense that could lead to imprisonment for up to 10 years. He called for urgent reforms and stricter enforcement to combat the widespread tax evasion and restore integrity to the tax system. The FBR has already identified Rs 227 billion in fraudulent activities across five major sectors following the appointment of Chairman Rashid Langrial.
These new measures, including the revision of property valuations, are part of the government’s comprehensive approach to tackling tax evasion and ensuring that the tax system operates efficiently and fairly for all citizens.
Also Read: PM Shehbaz Backs FBR’s Anti-Evasion Reforms
