The Regional Tax Office (RTO)-II Karachi has reported a remarkable surge in tax collection from property income during the first eight months (July-February) of the current fiscal year, marking a significant increase of 68 percent.
This surge is attributed to enhanced enforcement measures targeting individuals renting out immovable properties.
According to sources within the RTO-II Karachi, the collection under this category rose to an impressive Rs1,324 million during the initial months of the current fiscal year, compared to Rs790 million recorded during the same period in the previous fiscal year. This substantial growth in tax revenue can be primarily attributed to improved enforcement strategies and the revision of rates concerning rental income.
Tax collection from rental income falls under the purview of Section 155 of the Income Tax Ordinance, 2001, which outlines the obligations of entities making payments towards rent of immovable property. The section mandates that every prescribed person making such payments must deduct tax from the gross amount of rent at the rates specified in Division V of Part III of the First Schedule.
The explanation provided within the ordinance clarifies that the “gross amount of rent” includes various components related to the rented property, ensuring comprehensive coverage for taxation purposes.
Furthermore, the ordinance defines the term “prescribed person,” which encompasses entities such as the Federal Government, Provincial Government, Local Government, companies, non-profit organizations, charitable institutions, diplomatic missions of foreign states, private educational institutions, boutiques, beauty parlors, hospitals, clinics, maternity homes, and individuals or associations of persons paying gross rent of rupees one and a half million and above in a year. Additionally, the ordinance allows for the inclusion of any other person notified by the Board for the purpose of this section.
The surge in tax collection underscores the efficacy of enforcement efforts undertaken by tax authorities to ensure compliance with tax regulations governing property income. By implementing stringent measures and revising tax rates, the government aims to enhance revenue generation while promoting fairness and transparency in the taxation system.
Commenting on the significant increase in tax collection, officials from the RTO-II Karachi expressed satisfaction with the outcomes of their enforcement initiatives. They emphasized the importance of continued vigilance and enforcement actions to curb tax evasion and broaden the tax base, ultimately contributing to the country’s economic stability and development.
As the fiscal year progresses, authorities remain committed to sustaining this momentum in tax collection efforts, fostering a culture of compliance among taxpayers and promoting fiscal responsibility at all levels of society.
For further information and inquiries, individuals and entities are encouraged to liaise with their respective tax offices or visit the official website of the Federal Board of Revenue (FBR).
