ISLAMABAD: A tax rate at 20 per cent has been imposed on deemed income from immovable properties through a new section introduced to Income Tax Ordinance, 2001.
The government announced federal budget 2022/2023 on June 10, 2022 and introduced new tax on a person having more than one immovable property.
A person having more than one immovable property which values above Rs25 million shall be treated as five per cent of rental income of fair market value.
Through the Finance Bill, 2022 a new Section 7E has been introduced to Income Tax Ordinance, 2001 for the purpose.
Following is the tax of the proposed Section through the Finance Bill, 2022:
“7E. Tax on deemed income.– (1) Notwithstanding anything contained in the Ordinance, for tax year 2022 and onwards, a tax shall be imposed at the rates specified in Division VIIIC of Part-I of the First Schedule, on the income specified in this section.
(2) A resident person shall be treated to have received rent equal to five percent of the fair market value of an immoveable property situated in Pakistan whether such property has actually been rented out for any consideration or not.
(3) This section shall not apply to –
(a) one self-owned immovable property;
(b) self-owned business premises from which business is carried out;
(c) self-owned agriculture land where agriculture activity is carried out by person but does not include farmhouse and land annexed thereto;
(d) where the fair market value of the property or properties, in aggregate, excluding properties mentioned in clauses (a), (b) and (c) does not exceed twenty five million Rupees;
(e) a Provincial Government, a Local Government, a local authority or a development authority;
(f) land development and construction projects of builders and developers registered with Directorate General of Designated Non-Financial Businesses and Professions of Board;
(g) a property which is subject to tax under section 15 of the Ordinance and the tax chargeable is more than tax chargeable under this section:
Provided that if tax chargeable under section 15 is less than the tax chargeable under this section so much of the amount of tax which is in excess of tax chargeable under section 15 shall be paid under this section
(4) The Federal Government may include or exclude any person or property for the purpose of this section.”
According to the Finance Bill, 2022 the rate of tax under section 7E shall be 20 per cent.