ISLAMABAD - The Federal Board of Revenue (FBR) would notify the valuation tables of the properties instead of State Bank of Pakistan (SBP)’s valuators, it has been decided as talks between federal government and real estate sector concluded successfully on Saturday.

Finance Minister Ishaq Dar held talks with the property evaluators from all over the country on the issue of Valuation of Property and related tax matters. The talks between FBR and real estate association continued for four days before reaching the agreement.

“Appropriate legislation will be done to give effect to the proposed changes as agreed with all stakeholders,” Dar told the media later. He said the government and relevant stakeholders are agreed on valuation of properties in major cities.

“Valuation tables will be notified by FBR instead of SBP approved valuers,” he said. There are some parts of the cities where rates of properties have not been finalised as yet and there DC rate will continue to be applied, he added.

The minister also announced that holding period for CGT (capital gain tax) has been reduced from 5 to 3 years. There will be no CGT on property held for more than 3 years, he added.

Properties acquired on or after July 1, 2016 would be charged CGT at 10 percent if holding period is up to 1 year, 7.5 percent if holding period is between 1 and 2 years, and 5 percent if the period is between 2 and 3 years. There will be no CGT beyond 3 years time.

For the past transactions (properties acquired before July 1, 2016), the CGT would be 5 percent if holding period is less than 3 years, the minister said. And, if holding period is more than 3 years, the CGT would be zero percent.

Dar said that basic threshold of Rs3 million for application of withholding tax on purchase of immovable property has been enhanced to Rs4 million.

The FBR has agreed with the market rates provided by the real estate sector in cities including Karachi, Islamabad, Lahore, Rawalpindi, Jhelum, Gujranwala, Gujrat, Sialkot, Faisalabad, Multan, Rahim Yar Khan, Bahawalpur, Hyderabad, Sukkur, Peshawar, Abbotabad, Quetta and Gwadar.

The ranges of revaluation will be around minimum 35 percent to maximum 400-500 percent depending on location. For plots located in posh areas like DHA, the revaluation will be considerably enhanced.

The government had enhanced the tax rates on the sale and purchase of land and other properties in the federal budget 2016-17. It had also decided to appoint State Bank of Pakistan’s valuators to determine the current market prices of the properties – a decision rejected by the real sector.

The government increased the rate of CGT to 10 percent in the budget for 2016-17 on disposal of immovable property if it was being sold within five years of acquisition. Earlier, the period was two years and the tax rate was 2-5 percent; whereas, if the buyer held the property for more than five years, it was to be exempted from CGT.