Tax Book 2023

Income From Property Chapter- 08

Section

Topic covered

(For CAF- 6 and ICMAP students)

15 & 16 Property income, rent, & rent chargeable to tax

15A Deductions allowed against income from Property

68 Fair market value of rent

15 & 39 Examples of property not taxable under this head of income

Rates of income tax on property income as per 1st schedule

16 Treatment of advances

66 Liability in case of co-owners

11, 50, 51 & 101 Geographical source of property income & their taxability

Property income no taxable / entitled to tax credit

MCQ’s with solutions

ICMAP & CA Mod C past papers theoretical questions

For CAF- 6 and ICMAP Students

1. Income from property [u/s 15]

The rent received or receivable by a person for a tax year, other than rent exempt from tax shall
be chargeable to tax in that year under the head income from property. It means it shall be
chargeable to tax on accrual basis.

Property or rental income from the lease of immovable property in Pakistan shall be Pakistan source
income.

2. Rent [U/s 15(2)]

Rent means any amount received or receivable (inclusive of forfeited deposit for sale of land or

building) by an owner of land or a building as consideration for the use or occupation of, or the

right to use or occupy the land or building.

Signing amount paid by the tenant is also taxable under the head property income for the owner as

the same paid at the time of entering into rent agreement that is not refundable to tenant.

Owner:

The term owner has never been defined in the Ordinance that means the intention of the legislature is

to keep the meaning of the term “owner” far larger than the registered owner.

The circular No 14 of 1959 dated 10- 08 - 1959 throw the light on this situation:

“A person may be the owner of the property without being the owner of the land on which the property

is built. It is wrong to think that if the land on which the property has been built belongs to one person

but the building on it has been constructed by another person, the person owning the land will

automatically be the owner of building. Owner of the building is the person who has financed the

construction of the building and it is he who will be liable to tax in respect of bonafide annual letting

value that building.“

Therefore, the owner of land and building may happen to be two persons. The owner of building will

be the person who financed the construction of the building.

8 Income from property

Chapter