Govt plans to align official land price with market rates

Highlights:

• Government to align deed value with actual market price
• Draft policy aims to close land price declaration gap
• Black money, tax evasion linked to underreported property values
• Mouza values often outdated, misused for lower tax reporting
• New policy may reduce property taxes to encourage compliance
• Budget FY2025-26 likely to announce pricing policy reforms

The government plans to regularly update the official land price, aligning with the market rates to eliminate the gap between the actual sale price and the deed value of immovable properties, including land and flats.

The Revenue Implementation Division, formerly the National Board of Revenue (NBR), has formulated a draft policy in this regard.

The draft policy may be approved at a high-level meeting today, chaired by Finance Adviser Dr Salehuddin Ahmed. It is expected that the upcoming FY2025-26 budget will include an announcement on rationalising the actual and deed values of land and flats. The proposed budget will be presented by the financial adviser on 2 June.

In Bangladesh, the difference between the purchase-sale prices and the deed value of land and flats is an open secret. To hide black money and evade taxes, buyers and sellers often show a much lower price on deeds than the actual purchase price, using the mouza value as a reference.

Although several initiatives were taken during the tenure of former finance minister AMA Muhith to reduce the gap between mouza value and deed value, they were not successful. At the time, Muhith remarked that showing a lower deed value not only deprived the government of revenue but also resulted in large amounts of undeclared or illicit income for sellers.

When asked about this, the secretary of the Revenue Implementation Division, Abdur Rahman Khan, told TBS, "We have prepared a concept paper with a few strategies to bridge the gap between the actual price and the deed value. This will be discussed in a meeting today with the finance adviser, law adviser, and others, where a decision will be made."

"If the relevant ministries can update the mouza land values to match market prices, then in the upcoming budget, we will reduce the tax on the purchase and sale of immovable properties, including land and flats," he added.

At a recent event organised by the Economic Reporters Forum (ERF), Abdur Rahman Khan stated that under the law, the seller is responsible for paying the tax on the sale price of land or flats. However, in practice, this burden falls on the buyer in Bangladesh.

A finance ministry official told The Business Standard that mouza values are not regularly updated. Furthermore, the same mouza may contain various types of land with vastly different market values. 

Referring to the Gulshan mouza in the capital, he noted that the prices of land or flats on Gulshan Avenue are several times higher than those on Madani Avenue. Yet, when registering property in Gulshan Avenue, the mouza value of Madani Avenue—located within the same mouza—is often used to show a lower price.

"This is an open secret and everyone in the country knows it," he said. "To stop this practice and ensure that buyers and sellers are compelled to declare the actual price during deed registration, the Revenue Implementation Division has drafted a policy. This will be presented at a meeting chaired by the finance adviser, in the presence of senior officials from the law ministry, land ministry, and Rajuk's top executives."

He added that the draft policy may include strategies such as regularly adjusting mouza values to match market prices, reducing the size of mouzas, and lowering tax rates on land and flat registration. The draft will be finalised soon for inclusion in the next fiscal year's budget.