ISLAMABAD: A tax rate of 20% has been imposed on deemed income from immovable property through a new article introduced in the Income Tax Ordinance 2001.
The government announced the Federal Budget 2022/2023 on June 10, 2022 and introduced a new tax on a person owning more than one property.
A person owning more than one property worth more than Rs 25 million will be treated as five percent of the rental income of the fair market value.
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Through the Finance Bill 2022, a new Section 7E was introduced into the Income Tax Order 2001 for this purpose.
Here is the section tax proposed through the 2022 finance bill:
“7E. Deemed Income Tax.– (1) Notwithstanding anything contained in the Order, for the tax year 2022 and beyond, tax shall be imposed at the rates specified in Section VIIIC of the part I of the first schedule, on the income specified in this section.
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(2) A resident person shall be deemed to have received rent equal to five per cent of the fair market value of immovable property situated in Pakistan, whether or not such property was actually rented for value.
(3) This section does not apply:
a) a building in own ownership;
(b) own business premises from which business is conducted;
(c) agricultural land owned by an individual where the agricultural activity is carried on by one person but does not include the farm and the land adjoining it;
(d) where the fair market value of the property or properties, in aggregate, excluding the properties referred to in clauses (a), (b) and (c) does not exceed twenty-five million rupees;
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(e) a provincial government, local government, local authority or development authority;
(f) land development and construction projects of builders and developers registered with the Council’s Designated Non-Financial Businesses and Professions Branch;
(g) property which is subject to tax under section 15 of the Ordinance and the tax payable is greater than the tax payable under this section:
Provided that if the tax payable under section 15 is less than the tax payable under this section, a portion of the amount of tax in excess of the tax payable under section 15 shall be paid under this article
(4) The federal government may include or exclude any person or property for the purposes of this section. »
According to the Finance Bill 2022, the tax rate provided for in Article 7E is 20%.
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