In a somewhat surprising move, the government has added an additional clause relating to valuation of immovable properties in the recently introduced amendments to the National Accountability Ordinance (NAO), 1999, which is expected to benefit the accused property owners.
The provision reads: “Notwithstanding anything contained in this ordinance (containing amendments) or any other law for the time being in force, the valuation of immovable properties for the purposes of assessing as to whether a holder of a public office has assets disproportionate to his known sources of income shall be reckoned either according to the applicable rate prescribed by the district collector (DC) or the Federal Board of Revenue (FBR), whichever is higher. No evidence contrary to the latter shall be admissible.”
It is pertinent to note that amongst the DC, FBR and the prevailing market rate, the market rate is always the highest followed by the FBR and the DC.
Explaining the provision, a real estate player told a private media outlet that FBR price was specified for most urban centres while DC rate was applied to the rural areas. In some cases, both rates have been enforced [through the provision].
“For example, the FBR rate has been announced for the urban properties of the federal capital while its surrounding rural areas falling in the Islamabad Capital Territory (ICT) are covered by the DC rate,” he said. “Because of the FBR drive, particularly against the real estate sector, to document the largely unregulated economy, buyers and purchasers of properties have been inclined, due to fear of law, to disclose quite real prices, which, however, are still comparatively less than the market value. But they are higher than the FBR rate.”
The real estate player claimed that while investigating the allegations of assets disproportionate to the known sources of income, the National Accountability Bureau (NAB) estimates the value of the properties in question much beyond the market rate to blow up the charge against the accused persons. If the NAB was excessively fixing the worth of the properties under probe, the present scheme will now lead to ascertaining the value on the lower side.
The new provision in the NAO discounts the price mentioned by the buyers and sellers in the registries or other documents on stamp papers, deposited with concerned departments, even when it is higher than the FBR and DC rates.
“Such payments are always made through cheques, pay orders or bank drafts, but these most authentic documents and modes are not acceptable according to the new amendment about the valuation of properties,” said a senior official.
To reinforce this kind of valuation, the clause stated that no evidence contrary to the latter (higher rate) shall be admissible before any official forum including the courts. This means that even if the value written in the official documents by the buyer and seller for a property is higher than the DC/FBR rate, it will not be acceptable in the eye of the instant law.
The clause about valuation of the assets has not thus far attracted public attention or debate, is tailor-made to benefit some people who are currently facing the NAB inquest for having assets disproportionate to their known sources of income,” the official believed.
He said that the FBR rates were introduced in 2018 to have an idea about the value of urban properties for the purpose of taxation and duties. However, he pointed out that they were put in practice in a haphazard manner as they lacked uniformity. For example, similar rates have been applied in fixing the value of residential properties in different posh sectors of Islamabad and the commercial properties although their value grossly differ. The value of residential and commercial properties in F sectors is different.
No official explanation has been given for insertion of this provision. However, Special Assistant to the Prime Minister on Accountability Barrister Shahzad Akbar has stated that the purpose of the amendments is “rationalisation” of the NAB law. “The issue was repeatedly discussed in several cabinet meetings. Verbal assurances given to various segments including businessmen by different top government leaders have no value unless they have been translated into reality through the present amendments now,” he said.
It is a generally accepted reality in Pakistan that the DC rates of an immoveable property hover around 50pc of real-time market-based valuation rates in different parts of the country. Despite hiking the valuation rates notified by the FBR in the past, it ranges around 80pc of real market value. Now the NAB amended ordinance only mention DC rates and FBR notified rates, practically eliminating the concept of the market value of these properties.