Tax Management

Income from property (sec.15)

Group members Hira Nisar K5F15MCOM0002 Saher Yaseen K5F15MCOM0004 Zain Chaudhary K5F15MCOM00013 Ahmad Raza K5F15MCOM002231 Abdul Rehman K5F15MCOM0008

Hira Nisar

Contents Introduction Important Points Allowable Deductions from

income From property Exempt From Tax Format

IntroductionIncome from property or Rent chargable to tax (RCT) in the second source or head of income as mentioned in sec (11) of the income tax ordinance. According to sec 15(1) of the income tax ordinace, the rent received or receivable by a person for a tax year, other than rent exempt from tax, shall be chargeble to tax in that year under the head “Income from Property”.

Abdul Rehman

Important PointsProperty: Mean constructed buildingBuilding: Block of bricks or stonework

coved by roof.Land: Land means vacant (خالی) use for temporary huts of for storing material.Rent: Means any amount received or receivable by the owner of the land or the building.

Allowable Deductions from income From propertyCollection Charges.Any expenditure paid or payable py the person in the year for the purpose of collection of rent due in respect of property the deduction is allowed as 6% of the rent chargabel to tax or amount of collection charges which is less.

Allowable Deductions Cont...Repair Charges.Where the property is let out and tenant or owner bear the cost of repair then the amount of repair will be deducted form rent. The deduction is allowed as 1/5 of the rent chargable to tax (RCT)

Zain Chaudary

Allowable Deductions Cont...

Insurance Premium.The amount of premium paid or payabel by the person for insured the building from risk is also deducted from the rent. And remaing is chargable to tax.

Exempt From Tax Income from agriculture building. Income from property held under trust. Rental value of owner’s occupied residential

property. Rental value of owner’s occupied business

property. Fair market value is exempt from tax if following

conditions are full filled:1. Recipient is an individual or AOP2. Fair market does not exceed Rs. 150,000.3. Recipient does not receive income from

any other heads of income.

Saher Yasin

Tax Rates of property Individual or AOP

S.No TOTAL AMOUNT OF RENT RATE OF TAXES

1 Upto Rs. 150,000 0%

2 Rs. 150,001 to Rs. 1000,000 10% of the amount exceeding Rs. 150,000

3 Above Rs. 1000,000 15% of the amount exceeding Rs. 100,000

Tax Rates for companies Companies

S.NO Total Amount Of Rent Rate Of Taxes

1 Upto Rs. 400,000 5% of total amount

2 Rs. 400,001 to 10,00,000 Rs. 20,000 plus 7.5% of the amount exceeding Rs. 400,000

3 Amount Exceeding Rs. 10,00,000

Rs. 65,000 (fixed) plus 10% of amount exceeding Rs. 100,00,000

Ahmad Raza Bhatti

InformationRent of building@ Rs. 80,000 per month -----------

Unadjustable deposite received from tenant 800,000

Deductions clamied.

Repair charges 90,000

Fire insurance premium 24,000

Property tax 29,000

Intrest on loan 108,000

Collection charges 36,000

Legal charges for agreement 40,000

Format Income from propertyTotal income from salary 900,000Rent of buliding (80,000x12) 960,000Add: unadjustable advance (800,000x1/10)

80,000

1,040,000Less: Deduction allowed:Repair charges (1/5 of Rs. 1,040,000) 208,000

Fire Insurance premium 24,000Property tax 29,000Intrest on loan 108,000Other Expenses.Collection Charges 36,000Legal charges for agreement 40,000

76,000Or 6% of Rs. 1,040,000= Rs 62,400 62,400 (431,400) 608,600Taxable Income 1,508,600