Rental income from property i.e land or building is taxable as per the provisions described in sections 15 and 16 at the tax rates for rental income 2022-23 given in the First Schedule of the Income Tax Ordinance 2001.
The taxable rental income is calculated after making certain deductions as allowed in the ordinance. For details click on the following link:-
Computation of Rental Income for Taxation
Rental Income Tax Slabs in Pakistan 2022-23
The slab tax rates for rental income are given in Division VIA of Part I of the First Schedule to the Income Tax Ordinance 2001. The slab rates for the tax year 2023 are tabulated below:-
| Tax Rates Property Income 2022 | |
|---|---|
| Rental Income Slab | Tax |
| Up to Rs.300,000/- | Nil |
| From Rs. 300,000/- to Rs.600,000/- | 5% of amount above Rs.300,000/- |
| From Rs. 600,000/- to Rs. 2,000,000l- | Rs. 15,000/- plus 10% of amount exceeding Rs. 600,000/- |
| Above Rs. 2,000,000/- | Rs. 155,000/- plus 25% of amount exceeding Rs. 2,000,000/- |
Rental income up to Rs.300,000/- in a tax year is exempt from tax. For income slab between Rs. 300,000/- and Rs. 600,000/- the rate of tax will be 5% of the amount of rental income that is in excess of Rs. 300,000/-.
If the rental income exceeds Rs. 600,000/- and is up to Rs.2,000,000/- the rate of tax will be 10% of the amount of rental income that is in excess of Rs. 600,000/- plus Rs.15,000/-.
If the income from rent exceeds Rs.2,000,000/- the last tax slab will be applicable and the tax rate will be 25% on the amount of income exceeding Rs.2,000,000/- plus Rs.155,000/-.
Deduction of tax on source
In accordance with section 155 of the Income Tax Ordinance 2001, every prescribed person is required to deduct withholding tax on prescribed tax rates for rental income 2022-23 as described earlier, from the amount of rent being paid during a tax year. The following are included in the scope of the prescribed person for this purpose:-
i. The Federal Government
ii. Provincial Governments
iii. Local Government
iv. Company
v. Non Profit organizations including charitable institutions.
vi. Diplomatic missions of some foreign country or state
vii. Private educational institutions
viii. Boutique
ix. Beauty parlour
x. Hospitals
xi. Clinics or maternity homes
xii. Individuals or Associations of Persons that are paying annual gross rent of rupees one and a half million or above.
xiii. Any other person as notified by the Federal Board of Revenue (FBR) for this purpose.
Related Posts
Salary Income Tax Rates for Tax Year 2024
Disclaimer
“The contents of this post are intended for informational and educational purposes only and are based on data gathered by Team Fiscal Updates. It is important to note that the information provided here should not be relied upon as a reference for any legal documents. If you require assistance with legal decisions, it is recommended to seek proper professional advice. It may also be noted that the provisions of the Income Tax Ordinance 2001 have an overriding effect on all other laws of the country and shall prevail in case of any contradiction in terms of Section 3 of the Ordinance”