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Tax Implications of Property Income

The document discusses income from property under Pakistan's tax law. It defines rent as any amount received for the use or occupation of land or buildings. Rent chargeable to tax includes actual rent received as well as fair market rent if it is higher. It also includes forfeited deposits, obligations paid by tenants, and non-refundable advances. Certain properties like those with plant/machinery or agricultural buildings have different tax treatment. The tax rates for individual, AOP and company owners are provided.

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Umar Zahid
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28 views8 pages

Tax Implications of Property Income

The document discusses income from property under Pakistan's tax law. It defines rent as any amount received for the use or occupation of land or buildings. Rent chargeable to tax includes actual rent received as well as fair market rent if it is higher. It also includes forfeited deposits, obligations paid by tenants, and non-refundable advances. Certain properties like those with plant/machinery or agricultural buildings have different tax treatment. The tax rates for individual, AOP and company owners are provided.

Uploaded by

Umar Zahid
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd

INCOME FROM

PROPERTY
By NJ
INCOME FROM PROPERTY

“The Rent received or receivable by a person in a tax year ” is


taxable under the head ‘Income from property'.
However, any rent which is exempt from tax under any provision
of the Income tax Ordinance shall be ignored while computing
the “Rent Chargeable to Tax(RCT)” under this head.
RENT
“Rent means any amount received or receivable by the owner of
the land or the building for its use or occupation by some
other person”.
Generally the amount received or receivable is taken as rent.
However , where the ‘fair market rent’ (FMR) is more than the
actual rent ,than fair market rent shall be taken as rent.
2

Income from Property by NJ


INCOME FROM PROPERTY
Following amounts are also included in “Rent Chargeable
to Tax”:
1. Any forfeited deposit received under a contract for the
sale of land or a building.
2. Any obligation of the owner (e.g., property tax, etc.,) paid
by the tenant.
3. Any amount received by the owner from his tenant as
advance ,which is not adjustable against rent.

Income from Property by NJ


INCOME FROM PROPERTY

RENT OF PROPERTIES NOT TAXABLE AS “INCOME


FROM PROPERTY”
1. Any building which is let out together with the plant and
machinery installed therein shall not be taxable under the
head. It shall be taxable under “Income from other
Sources”.
2. Any agricultural building whose income is treated as
agricultural income.
3. Any property which is sublet by the tenant.

Income from Property by NJ


INCOME FROM PROPERTY
 Advances
1. Adjustable No Treatment . Ignore
2. Not Adjustable (a) 1/10th of amount is included in RCT
in each in which received and in
following 9 years.
(b) If tenant Vacates and amount is
refunded , nothing shall be added in
year of refund and subsequent years.
‘(c) when rented to another tenant
A–B
10
A = Amount of New advance 5

B = Portion of old adv already charged to tax


Income from Property by NJ
INCOME FROM PROPERTY
 Rent Inclusive of Utilities
1. Can not be Segregated Actual utility expenses deducted
from RCT
2. Can be Segregated
Rent IFP
Utilities IFOS less actual expenses

 Liability In Case of Co-Owners


Share of each person instead of AOP

Income from Property by NJ


INCOME FROM PROPERTY
- RATES(INDIVIDUAL AND AOP)

Gross Amount of Rent Rate of Tax

Upto Rs 150,000 Nil

Rs 150,001 – Rs 400,000 5 % of the amount exceeding Rs 150,000

Rs 400,001 – Rs 1,000,000 Rs 12,500 + 7.5 % of the amount


exceeding Rs 400,000

Over Rs 1,000,000 Rs 57,500 + 10 % of the amount


exceeding Rs 1,000,000

Income from Property by NJ


INCOME FROM PROPERTY
- RATES(COMPANY)

Gross Amount of Rent Rate of Tax

Upto Rs 400,000 5%

Rs 400,001 – Rs 1,000,000 Rs 20,000 + 7.5 % of the amount


exceeding Rs 400,000

Over Rs 1,000,000 Rs 65,000 + 10 % of the amount


exceeding Rs 1,000,000

Income from Property by NJ

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