Federal Board of Revenue (FBR) has issued withholding tax rates for rental income from immovable properties during 2022-2023.
The FBR issued the withholding tax card for tax year 2023 (July 01, 2022 to June 30, 2023) after amending the Income Tax Ordinance, 2001 through changes brought through Finance Act, 2022.
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Following is the text of Section 155 related to rental income from immovable property and rates of tax under this section:
Section 155: Rent of immoveable property.
(1) Every prescribed person making a payment in full or part (including a payment by way of advance) to any person on account of rent of immovable property (including rent of furniture and fixtures, and amounts for services relating to such property) shall deduct tax from the gross amount of rent paid at the rate specified in Division V of Part III of the First Schedule.
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Explanation.- “gross amount of rent” includes the amount referred to in sub-section (1) or (3) of section 16, if any.
Explanation.— For removal of doubt, it is clarified that the sub section (1) shall apply when a payment is made on account of rent of immoveable property irrespective of head of income.
(3) In this section, “prescribed person” means –
(i) the Federal Government;
(ii) a Provincial Government;
(iii) Local Government;
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(iv) a company;
(v) a non-profit organization or a charitable institution;
(vi) a diplomatic mission of a foreign state;
(via) a private educational institution, a boutique, a beauty parlour, a hospital, a clinic or a maternity home;
(vib) individuals or association of persons paying gross rent of rupees one and a half million and above in a year; or
(vii) any other person notified by the Board for the purpose of this section.
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Following are the withholding tax rates on rental income from immovable properties applicable on individuals and Association of Persons (AOPs) and in case those are not on Active Taxpayers List (ATL):
| Sr. No. | Gross amount of rent | Rate of tax | Not on ATL |
| 1. | Where the gross amount of rent does not exceed Rs300,000 | Nil | Nil |
| 2. | Where the gross amount of rent does not exceed Rs600,000 | 5 per cent of the gross amount exceeding Rs300,000 | 100 per cent increase |
| 3. | Where the gross amount of rent exceeds Rs600,000 but does not exceed Rs2,000,000 | Rs15,000 plus 10 per cent of the gross amount exceeding Rs600,000 | 100 per cent increase |
| 4. | Where the gross amount of rent exceed Rs2,000,000 | Rs155,000 plus 25 per cent of the gross amount exceeding Rs2,000,000 | 100 per cent |
The rate of withholding tax for rental income from immovable properties in case of companies is 15 per cent and in case of not on ATL the rate is 30 per cent.
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