The Sindh government has enacted laws to align property rates in Karachi, Hyderabad and Sukkur with the valuation table issued by the Federal Revenue Council, Chief Minister Sindh Murad Ali Shah said Friday.
The chief minister announced this at a meeting with World Bank Country Director Mr Najy Binhussin via video link from CM House.
In July 2019, FBR issued assessment tables for 21 cities in Pakistan, including three Sindh cities, for the collection of Capital Gains Tax. The following table describes the rates subject to property tax.
The scoring tables for Karachi, Hyderabad and Sukkur are aligned with the FBR table, said CM Shah. The revision will affect the taxes paid on property in these cities.
There are two types of taxes you pay on property transactions: federal and provincial. These taxes are further divided into more categories. Federal taxes include Capital Gains Tax (charged to the sale of property) and Advances Tax (charged to the purchase of property).
Provincial taxes include Capital Value Tax, registration fees and stamp duty (all three apply to buying property). This tax is charged at the minimum property rate, which has been determined by the FBR. The appraisal rate differs from one area to another and the type of property you own, such as residential open plots, built residential properties, commercial open plots, commercial built properties, industrial open plots and built-up properties, flats or apartments. You can find details on the FBR website.
The FBR’s revised assessment came after the IMF and FATF called Pakistan’s real estate business a system for converting black people’s money to white. Karachi, Hyderabad and Sukkur are part of the revised valuation table, but federal and Sindh government rates are different. These rates are now being aligned.
On a resilient institution for a sustainable economy, the chief minister said that Sindh had become one of the first provinces to prepare a draft Fiscal Responsibility Law. It includes a Medium-Term Fiscal Framework (MTFF) and periodic updates to the MTFF throughout the year, limits on expenditure growth and the fiscal deficit, he said. The bill has been filed in the assembly.
Regarding the problem of encroachment, CM Shah said that a Resettlement and Rehabilitation Framework would be developed before eliminating encroachment in the province.
The meeting discussed various Karachi projects launched with World Bank assistance to review their progress and streamline their funding.