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Taxation

Of
Income from Property
(Taxpayers Facilitation Guide)

Revenue Division
CENTRAL BOARD OF REVENUE
GOVERNMENT OF PAKISTAN

Brochure - 004
July 2004
Our Vision
To be a modern, progressive, effective, autonomous and
credible organization for optimizing revenue by providing
quality service and promoting compliance with tax laws

Our Mission
Enhance the capability of the tax system to collect due
taxes through application of modern techniques,
providing taxpayer assistance and by creating a
motivated, satisfied, dedicated and professional
workforce

Our Values
Integrity
Professionalism
Teamwork
Courtesy
Fairness
Transparency

For further details and information please contact our helpline center at
E-mail helpline@cbr.gov.pk Fax 051-9219215
Telephone 051-111-227-227 or 051-111-227-228
or
Visit your nearest tax facilitation center (located in all major cities)
or
Visit our website at www.cbr.gov.pk

Brochure - 004 Taxation of Income from Property


Revenue Division
Central Board of Revenue
Government of Pakistan

Brochure - 004
July 2004

Contents
Introduction
Introduction 1
General Concepts of Taxation:
This brochure gives basic Taxable income
Total income
2
2
information for the benefit and use Resident and non-resident individual 2
of persons deriving income from Pakistan source income
Foreign source income
2
3
property to understand their If you are an employee or official of
Government posted abroad 3
obligations and compute the Tax year 3
chargeable income from “property” Maximum amount that is not chargeable to tax 3
Agricultural income 3
under the Income Tax Ordinance, Loan, advance, deposit or gift 3
2001. Self-hiring 3
Recouped expenditure or loss 3
Double derivations and double deductions 3
In this brochure some terms that Income from property
Applicable provisions of law 4
are not familiar to taxpayers used Comprising of
Rent 4
for the first time are in italic bold -
- Advance rent
and explained appropriately. -
-
Amounts not adjustable against rent
Subsequent recovery of irrecoverable unpaid rent
4
5
- Unpaid liability in respect of a deduction
for an expenditure earlier allowed 5
Ownership of land or building 5
Joint owners 5
Deductions
- Repairs 5
- Insurance premium 5
- Local rate, tax, charge or cess 5
- Ground rent 5
- Profit (interest/ mark-up) 5
- Share in rent 5
- Profit (interest/ mark-up) mortgaged property......5
- Collection charges 5
This brochure is to assist the taxpayers and reflects the - Legal charges 5
legal position at the time of printing. In case of any
- Irrecoverable unpaid rent 6
conflict the legal provisions of the law shall always - Unpaid liability subsequently paid 6
prevail over the contents of this brochure.
- Basis of deduction 6
- Deductions not admissible 6
Comments and suggestions - Apportionment of expenditures 6
We welcome your comments about this Set off of losses 7
brochure and y our suggestions for future Carry forward of losses 7
Sample computations
editions. Annex I 8
You can e-mail us at membertpef@cbr.gov.pk Annex II 9
or Annex III 10
You can write to us at the following address:
Facilitation And Tax Education,
Central Board of Revenue,
Constitution Avenue, Islamabad

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Brochure - 004 Taxation of Income from Property
General Concepts of Taxation prize offered by companies for promotion
of sales.
The Federal levy on income (Income Tax), with
effect from July 01, 2002, is governed by the The scope of total income under the Income Tax
Income Tax Ordinance, 2001 and Income Tax Ordinance, 2001 is determined with reference to
Rules, 2002. It is an annual charge on the residential status of a taxpayer. In case of
taxable income for a tax year, if it exceeds the resident individual it is both Pakistan source
maximum amount that is not chargeable to income and foreign source income, while in
tax. case of non-resident individual it is restricted
to Pakistan source income only.
“Taxable Income” means total income as
reduced by deductible allowance on account of An individual is “resident individual” if:
Zakat paid under the Zakat and Usher
Ordinance, 1980 other than Zakat paid on a a. he is present in Pakistan for 182 days or
debt, the profit of which is chargeable to tax more in a tax year; or
under the head “Income from Other Sources”
and the deduction is admissible against such b. he is an employee or official of the
profit on debt. Federal or Provincial Government
posted abroad in a tax year.
“Total Income” is the sum of income under the
following heads: An individual is “non-resident” if he is not a
resident individual.
• Salary; In order to compute the number of days an individual is
present in Pakistan in a tax year, the following rules apply: -
• Income from property;
• A part of a day that an individual is present in
Pakistan (including the day of arrival in, and the day
• Income from business; of departure from, Pakistan) counts as a whole day
of such presence; However, a day or part of a day
• Capital gains; and where an individual is in Pakistan solely by reason of
being in transit between two different places outside
Pakistan does not count as a day present in
• Income from other sources [like Pakistan.
dividend, royalty, profit on debt, rent
from sub-lease of land or building, • The following days in which an individual is wholly or
partly present in Pakistan count as a whole day of
income from lease of any building
such presence:-
together with plant or machinery, prize
on prize bond, winnings from a raffle, - a public holiday;
- a day of leave, including sick leave;
lottery or crossword puzzle, or a loan,
- a day that the individual’s activity in Pakistan
advance, deposit or gift (subject to is interrupted because of a strike, lock-out or
certain conditions)]. delay in receipt of supplies; or
- a holiday spent by the individual in Pakistan
Income under a specific head for a tax year is before, during or after any activity in
Pakistan; and
the total of the amounts derived under that head,
which are chargeable to tax, as reduced by the “Pakistan source income” is defined in section
deductions, if any, admissible under the Income 101 of the Income Tax Ordinance, 2001, which
Tax Ordinance, 2001. caters for incomes under different heads and
situations. Some of the relevant Pakistani
However, certain incomes are subject to source incomes are as under: -
separate taxation, or subject to collection or
deduction of tax at source and treated as a final • Property or rental income from the lease
tax. These are excluded from the ambit of of immovable property in Pakistan;
taxable income e.g.: -
• Dividend paid by resident company;
• Dividend received from a company; and
• Profit on debt paid by a resident person;
• Prize on a prize bond; or winnings from
raffle, lottery, quiz or crossword puzzle; or

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Brochure - 004 Taxation of Income from Property
“Foreign source income” is all such incomes, • Through a banking transaction from a
which are not Pakistan source income. person holding a National Tax Number
Card;
If an employee or official of the Federal
Government or a Provincial Government is is treated as income chargeable to tax under the
posted abroad, his residential status remains head “income from other sources”.
“resident” irrespective of his period of stay in
Pakistan. This makes both Pakistan and foreign The purpose is to document the transactions on
source income liable to income tax. account of loan, advance, deposit or gift
reflected in the Wealth Statement or
“Tax Year” is a period of twelve months ending Reconciliation of Wealth. The following
th
on 30 day of June i.e. the financial year and is transactions, however, are excluded:
denoted by the calendar year in which the said
date falls. For example tax year for the financial • Loan, advance, deposit or gift received
year from July 01, 2003 to June 30, 2004 shall from a banking company or an institution
be denoted by calendar year 2004. notified under the Companies Ordinance,
1984 by the Federal Government in the
“Maximum amount that is not chargeable to official gazette as a ‘financial institution’; or
tax” for the year 2004 is Rs. 80,000 of taxable
income derived from all sources taken together. • Advance payment for the sale of goods or
If there is property income of Rs. 60,000, salary supply of services.
income of Rs. 18,000 and profit on debt (interest
etc) of Rs. 3,000 this will result into taxable Self-hiring – When an employee gives on rent
income of Rs. 81,000, which exceeds the any building (house/flat/apartment etc.) owned
maximum amount that is not chargeable to tax. by him or his spouse to the employer and the
employer provides the same against the
Effective from tax year 2005, the maximum employee’s entitlement for a rent-free
amount that is not chargeable to tax stands accommodation or housing, it results into:
enhanced to Rs. 100,000 of taxable income
derived from all sources taken together. • Provision of a perquisite by the employer
to the employee chargeable as income
Agricultural Income is taxed by the Provincial from “salary”; and
Governments. If an individual enjoys agricultural
income exceeding Rs. 80,000 then his income • Receipt of rent of land or building by the
greater than ‘zero’ from all sources taken employee or his spouse, as the case may
together (excluding agricultural income) will be be, chargeable as income from “property”.
chargeable to tax under the Income Tax
Ordinance, 2001. If income from property is Rs. Recouped expenditure or loss is the income
20,000 and agricultural income exceeds Rs. of the tax year in which it is received in cash or
80,000, then salary income of Rs. 20,000 will be in kind and chargeable under the head of
liable to charge of income tax. income where deduction for such expenditure or
“Agricultural income” is defined broadly to include direct loss was allowed in computing the chargeable
and indirect income from land situated in Pakistan used for income of an earlier year.
agriculture. Rental income for the use of cultivated land, rent
for a building on or in the vicinity of cultivated land if the Double derivations and double deductions-
building is occupied by the cultivator or by the receiver of
rental income from cultivated land are some of the examples Any amount chargeable to tax on the basis of
of indirect income. being receivable shall not be again chargeable
on the basis that it is received or vice versa.
Loan, advance, deposit or gift received in a Similarly any expenditure deductible on the
tax year from another person otherwise than: basis of being payable shall not be again
deductible on the basis that it is paid or vice
• By a crossed cheque drawn on a bank; or versa.

3
Brochure - 004 Taxation of Income from Property
Income from Property However:

Applicable provisions of law for the • rent of a building let out together with plant
computation of “Income from Property” are and machinery is specifically excluded and
sections 15, 16 and 17 of the Income Tax is chargeable under the head “income from
Ordinance, 2001. Other Sources”.

“Income from property” is computed on the basis • any amount included in the rent for the
of actual rent received or receivable for the provision of amenities, utilities or any other
period the land or building remained in the use service connected with the renting of the
or occupation of, or right to use or occupy by the building is specifically excluded and is
tenant; chargeable under the head “income from
Other Sources”.
Rent of land (open plot) is also chargeable
under the head “income from property”; • where the rent received or receivable is less
than the fair market rent of the property,
Forfeited deposit under a contract for the sale of the owner will be treated as having derived
land or a building is also now chargeable under the fair market rent for the period the
the head “income from property”; property is let on rent in the tax year.

Deductions allowed in computing income from Fair market rent is the consideration for the use
property can be claimed either on the basis of or occupation of, or the right to use or occupy
actually paid during the tax year or on the basis the land or building which it would ordinarily
of payable for the corresponding tax year; and fetch in the open market at that time.

Liabilities in respect of deductions allowed on Advance rent received during a tax year is
payable basis are to be included in chargeable chargeable to tax only to the extent it relates to
income, if not paid within three years. that tax year. Unadjusted balance of advance
rent is chargeable to tax in the following tax year
“Income from property” comprises of: (s) to which it relates.

• rent received or receivable by the owner for Amount not adjustable against the rent
a tax year; received by the owner of a building, from a
tenant is treated as rent chargeable to tax in the
• amounts not adjustable against the rent tax year in which it was received and the
received from the tenant; following nine years in equal proportion i.e. one-
tenth of the amount is treated as rent received of
• subsequent recovery of irrecoverable the building for ten years commencing from the
unpaid rent earlier allowed as deduction; year in which it was received. Generally such
and amounts are both non-refundable and
refundable goodwill or security deposit by
whatever name called.
• unpaid liability in respect of a deduction
for an expenditure earlier allowed on
In case the amount not adjustable against the
payable basis, if not paid within three years.
rent is refunded to the tenant on termination of
the tenancy before the expiry of ten years and,
Rent is the amount received or receivable by the
owner of land or a building:
• no further similar amount is received from
the succeeding tenant or the land or building
• as consideration for the use or occupation
is not further let out, no portion of the
of, or the right to use or occupy, the land or
amount is treated as rent received for
building; and
inclusion in the chargeable income of the tax
year in which it is refunded and in any
• any forfeited deposit received under a
subsequent tax years.
contract for the sale of land or a building.

4
Brochure - 004 Taxation of Income from Property
• a further similar amount is received from the However, this rule does not apply to income
succeeding tenant, the amount received chargeable under t he head “income from
from the succeeding tenant as reduced by business” i.e. business of renting out of land or
such portion of the amount already treated building.
as rent received from the preceding tenant,
is treated as rent chargeable to tax in the tax Deductions for expenditures or allowances
year in which further similar amount is allowed in computing the “income from property”
received and the following nine years in are as follows:
equal proportion.
• Repairs allowance equal to one-fifth of the
The adjustment of the portion of the amount rent of the building chargeable to tax. This is
already treated as rent received of the building a fixed allowance admissible against the
from the preceding tenant against the amount rent irrespective of the amount if any,
received from the succeeding tenant can only be expended on the repairs of the building;
made if the change in tenancy takes place
before expiry of ten years in which such amount • Premium paid or payable to insure the
was received from the preceding tenant. building against the risk of damage or
destruction;
Subsequent recovery of irrecoverable unpaid
rent earlier allowed as a deduction is income • Local rate, tax, charge or cess paid or
chargeable to tax in the tax year in which it is payable in respect of the land or building to
wholly or partly recovered. a local authority or government not being the
tax payable under the Income Tax
Un-paid liability in respect of a deduction for Ordinance, 2001;
an expenditure earlier allowed on the basis of
being payable that remains unpaid within three • Ground rent paid or payable in respect of
years of the end of the tax year in which the the land or building;
deduction was allowed is treated as income
chargeable to tax in the first tax year following • Profit (interest / mark-up) paid or payable
the end of the said three years. on money borrowed, including by way of
mortgage, to acquire, construct, renovate,
Ownership of land or building has a direct extend or reconstruct the land or building;
nexus with “income from property”. This means
that any amount received or receivable as • Share in rent or share towards appreciation
consideration for the use or occupation, or the in value of land or building paid or payable
to House Building Finance Corporation or a
right to use or occupy, of any land or building
which is owned by the taxpayer is chargeable scheduled bank for their capital contribution
under this head of income. While similar to acquire, construct, renovate, extend or
reconstruct the land or building under a
consideration for any land or building not
owned by the taxpayer falls under the head scheme of investment in property;
“income from Other Sources” e.g., sub-letting.
• Profit (interest / mark-up) paid on a property
subject to mortgage or other capital charge;
Joint owners – Where two or more persons
own any land or building with their respective
• Collection charges on account of
shares definite and ascertainable, the income
expenditure (not exceeding six percent of
from property is not chargeable to tax jointly as
the rent chargeable to tax) paid or payable
an association of persons. This effectively
for the purpose of collecting the rent due in
means that such persons are not required to
respect of the land or building;
submit a return of income in respect of a jointly
owned land or building given on rent in the
• Legal charges i.e. expenditure for legal
status of joint owners. In fact, each joint owner is
services acquired to defend the title to the
required to include his share in the income or
land or building or any suit in a court
loss from jointly owned land or building in his
connected with the land or building in a
own return of income and computation of
court;
taxable income.

5
Brochure - 004 Taxation of Income from Property
• Irrecoverable unpaid rent of the land or - exceeding the maximum amount that is not
chargeable to tax (at present Rs.80,000 per
building subject to the conditions that – annum) unless tax is deducted at source.

- The tenancy was bonafide; st


Effective from 1 July, 2004, the limit of
Rs. 5,000 mentioned above stands
- The defaulting tenant has vacated or enhanced to Rs. 10,000
steps have been taken to compel the
tenant to vacate the land or building: o Expenditures exceeding Rs. 5,000 in
respect of insurance premium, profit on
- The defaulting tenant is not in money borrowed, share in rent and
occupation of any other land or building share towards appreciation in value of
owned by the same person; land or building, collection charges or for
legal services, where the total claim in a
- All reasonable steps have been taken to tax year exceeds Rs. 50,000, unless
institute legal proceedings for the payments exceeding Rs. 5,000 are
recovery of the unpaid rent or there are made by a crossed cheque or crossed
reasonable grounds to believe that legal bank draft.
proceedings would be useless; and
Apportionment of expenditure is necessitated,
- The amount of irrecoverable unpaid rent on a reasonable basis taking account of the
was included in the chargeable income relative nature and size of the activities to which
under the head “income from property” the expenditure relates i.e.:
of the relevant tax year in which the rent
was due and tax thereon was duly paid. • Deriving incomes under more than one head
of income; or
Unpaid liability or part of the liability
subsequently paid, which was earlier treated
• Deriving incomes comprising taxable
as income chargeable to tax, (being not paid
income, exempt income, class of incomes
within three years), is allowed as a deduction in
subject to separate taxation or class of
the tax year in which the payment is made.
incomes subject to collection or deduction of
tax as a final tax; or
Basis of deduction for expenditures is either:
• Deriving income chargeable to tax and for
• Actually paid during the tax year; or
some other purposes.
• Payable for the corresponding tax year. In case of “income from property” the most
common situations involving apportionment of
No claim for any expenditure can be made while expenditures are:
computing income under any other head once a
deduction for the same expenditure is allowed
• Land or building not available for rent for a
under the head “income from property”.
full year:
Deductions not admissible
- The land or building (holiday home) that
is in owner’s residential use for a part of
• Any allowance or expenditure other than a year (on seasonal or need basis) and
those mentioned hereinabove; rented out for a part of year when it is
not in owner use.
• Expenditure otherwise specifically not
deductible, e.g.,
• Land or building partly rented out and partly
o Salary of an employee engaged for collecting rent: used for some other purposes:

- exceeding Rs. 5,000 per month unless paid - The land or building that is partly given
through crossed cheque or direct transfer of
the funds to the employee’s bank account; or
on rent and is partly in own business
use.

6
Brochure - 004 Taxation of Income from Property
- The land or building that is partly given
on rent and is partly in the owner’s
residential use.

• Expenditures incurred partly for land or


building rented out and partly for some other
purposes

- Profit (interest/mark-up) on money


borrowed that is partly used in the
construction of a building rented out and
partly used in buying a motor vehicle for
personal use.

Set off of losses under the head “income from


business” (other than speculation) and “income
from other sources” can be made against the
“income from property”.

Loss under the head “income from property” can


be adjusted against the income for the year
under any other head.

Carry forward of losses under the head


“income from property” to the following year is
not allowed.

7
Brochure - 004 Taxation of Income from Property
Annex-I
Sample computation
TAX YEAR 2004
(Financial Year July 2003 to June 2004)

Identification: PLOT NO.1, STREET NO.2, SECTOR 3, CITY 4 (OPEN PLOT)

Particulars Amount

Income

Rent of land 240,000


Rented out at Rs. 20,000 per month and remained occupied by the tenant from July 2003 to June 2004. [Rs. 20,000 X
12].

Amounts not adjustable against the rent Nil


Rs. 500,000 received on July 01, 2000, which is 2001 not adjustable against the rent of the land. However, nothing is to
be included in the chargeable income as this provision of the law is attracted where the owner of building and not land
receives such amount.

Total Income (Sub-total) 240,000

Deductions

Repairs Nil
Admissible only against the rent of the building chargeable to tax.

Premium to insure Nil


Admissible only against the rent of the building.

Ground rent 10,000

Profit on money borrowed 48,000


Initially Rs. 1,000,000 borrowed out of which Rs. 600,000 utilized to acquire the land given on rent and Rs. 400,000 for
purchase of a motor vehicle for personal use. Profit (interest) for the current tax year charged by the bank Rs. 80,000 on
outstanding balance of Rs. 500,000. The profit (interest) is to be apportioned and Rs. 48,000 in proportion of loan utilized
to acquire the land is an admissible deduction [i.e. Rs. 80,000 ÷ Rs. 1,000,000 X Rs. 600,000].

Collection charges 14,400


Salary paid to employee for collecting rent Rs. 18,000 but six percent of the rent comes to Rs. 14,400 [i.e. 6% of Rs.
240,000]. Lower of actual expenditure or six percent of rent is admissible.

Total Deductions (Sub-total) 72,400

Balance Income (Total Income minus Total Deductions) 167,600

Add: Subsequent recovery of irrecoverable unpaid rent 10,000


In tax year 1999 an amount of Rs. 45,000 was allowed as deduction on account irrecoverable unpaid rent. In the current
year recovery of Rs 10,000 made against the same is chargeable to tax.

Add: Unpaid liabilities within three years 10,000


Ground rent of Rs. 10,000 per annum allowed, as deduction in the tax years 2001, 2002 and 2003 remained unpaid till
June 30, 2004. The deduction relating to the tax year 2001 is included in the chargeable income being a liability not paid
within three years.

Net income 187,600

Your share Percentage 50%

Chargeable Income (Your Share) 93,800

8
Brochure - 004 Taxation of Income from Property
Annex-II
Sample computation
TAX YEAR 2004
(Financial Year July 2003 to June 2004)

Identification: SHOP NO.21, PLAZA 22, ROAD 23, CITY 24

Particulars Amount
Income
Rent of building 102,000
Rented out from July 01, 2003 to September 30, 2003 at Rs. 10,000 per month. From October 01, 2003 to December
31, 2003 it remained vacant. From January 01, 2004 let out to a new tenant for Rs. 12,000 per month. In this case
nothing will be included in the income for the period the building remained vacant. [Rs. 10,000 X 3 (+) Rs. 12,000 X 6].

Forfeited deposit under a contract for sale 20,000


Received Rs. 20,000 as token Money (Biyana) under an agreement to sell for the said shop. The purchaser backed out
resulting into forfeiture of the Token Money (Biyana).
Amounts not adjustable against the rent 24,000
Security deposit of Rs. 200,000 not adjustable against the rent of refunded to the old tenant on September 30, 2003 who
vacated the shop after occupying since July 01, 2001. Similar security deposit of Rs. 300,000 received from the new
tenant on January 01, 2004. Amount chargeable to tax is arrived at as under: -
Amount received from the new tenant Rs. 300,000
Less: Amount included in the chargeable income on account of amount received from the old tenant:
In the tax year 2001 Rs. 20,000
In the tax year 2002 Rs. 20,000
In the tax year 2003 Rs. 20,000 Rs. 60,000
Rs. 240,000
One-tenth of Rs. 240,000 is included in the chargeable income of the current tax year and similar amount in the following
nine tax years.
In case of change in tenancy after ten years, no adjustment / deduction in respect of amount already included in the
chargeable income is allowed against the amount received from the succeeding tenant. In other words, in such a
situation, the above adjustment / deduction of Rs. 60,000 is not admissible and instead one-tenth of Rs. 300,000 is
included in the chargeable income of the current tax year and similar amount in the following nine tax years.
Total Income (Sub-total) 146,000
Deductions
Repairs 29,200
This allowance is calculated as one-fifth of the rent of building including forfeited deposit and one-tenth of the amount not
adjustable against the rent [1/5th of Rs. 146,000 (Rs. 102,000 + Rs. 20,000 + Rs. 24,000)] irrespective of the extent of
actual expenses.
Premium to insure 11,600
Local rate, tax, charge or cess 9,000
Collection charges 6,000
Salary paid to employee engaged for collecting rent Rs. 6,000 but six percent of rent comes to Rs. 8,760 [i.e. 6% of Rs.
146,000]. Lower of actual expenditure or six percent of rent is admissible.
Legal charges 3,000
Fee paid for legal services acquired to defend the suit filed by the intending purchaser where Token Money (Biyana) was
forfeited.
Total Deductions (Sub-total) 58,800
Balance Income (Total Income minus Total Deductions) 87,200
Less: Unpaid liability subsequently paid 15,000
In the tax year 2002 an amount of Rs. 15,000 was included in the chargeable income being property tax allowed as
deduction in the tax year 1998 but not paid within three years. In the current tax year the same has been paid and is
therefore deductible from the chargeable income.
Net income 72,200
Your share Percentage 100%

Chargeable Income (Your Share) 72,200

9
Brochure - 004 Taxation of Income from Property
Annex-III
Sample computation
TAX YEAR 2004
(Financial Year July 2003 to June 2004)

Identification: H.NO.11, STREET 12, SECTOR 13, CITY 14


(UPPER PORTION – 45% of total covered area)

Particulars Amount

Income

Rent of building 120,000


Rented out on November 01, 2003 at Rs. 15,000 per month and received Rs. 180,000 as advance rent for one year.
Before letting out (upper portion) it was also in the self use of the owner alongwith the ground floor. Rent chargeable to
tax will be from November 01, 2003 to June 30, 2004, the period for which it remained rented out during the current tax
year (Rs. 15,000 X 8).

Amounts not adjustable against rent 15,000


In addition to the advance rent (adjustable) a further amount of Rs. 150,000 received as security deposit not adjustable
against the rent and refundable on vacating the portion of house rented out. One-tenth of this amount is treated as
income chargeable to tax of the tax year in which received and a similar amount every year in the following nine years
(1/10th of Rs. 150,000).

Total Income (Sub-total) 135,000

Deductions

Repairs 27,000
This allowance is calculated as one-fifth of the rent of the building including one-tenth of the amount not adjustable
against the rent [1/5th of Rs. 135,000 (Rs. 120,000 + Rs. 15,000)] irrespective of the extent of actual expenses.

Premium to insure 3,000


Insurance premium of the house is Rs. 10,000. This is apportioned both between the portion rented out and in self- use
of the owner and between the period the upper portion remained rented out and in self-use. Based on covered area
(45% of the total covered area) Rs. 4,500 relates to the portion rented out and out of that Rs. 3,000 relates to the period
(8 months) it was rented out. [45% of Rs. 10,000 ÷ 12 X 8].

Local rate, tax, charge or cess 4,500


Property tax of Rs. 15,000 is also apportioned as discussed above. [45% of Rs. 15,000 ÷ 12 X 8].

Ground rent 360


Ground rent of Rs. 1,200 is also apportioned as discussed above. [45% of Rs. 1,200 ÷ 12 X 8].

Share in rent etc. 4,800


Share in rent of Rs. 16,000 is also apportioned as discussed above. [45% of Rs. 16,000÷12 X 8].

Total Deductions (Sub-total) 39,660

Balance Income (Total Income minus Total Deductions) 95,340

Your share Percentage 100%

Chargeable Income (Your Share) 95,340

10
Brochure - 004 Taxation of Income from Property
Other Facilitation and Tax Education Material Produced
by
Central Board of Revenue
Computer software Income Tax Assistant Version 1.0 for the tax year 2003
Income Tax Assistant Version 1.1 for the tax year 2004

For computing chargeable income from salary, property,


business, capital gains and other sources, exclusions from
income, taxable income, applicable gross income tax,
reductions, credits etc. and income tax payable /
refundable

For generating related computations, returns, certificates,


statements, wealth statement and its reconciliation
Publications - Universal self assessment and record keeping
Business accounts, documents and records
Taxation of income from salary
How to fill in income tax forms
Collection and deduction of tax at source
Charities
Income Tax Appeals

Publications under process - Taxation of income from other sources


Depreciation and amortization
Sales Tax guide
Transfer of Residence Rules (Customs)

FATE
“Facilitation And Tax Education “
Is the Key to
Voluntary Compliance
And
Voluntary Compliance
Is the Key to
“Better Revenues”

11
Brochure - 004 Taxation of Income from Property