Tax Book 2023

Income From Property Chapter- 08

Less:

Actual electricity bills paid 8,000

Taxable income from other sources 16,000

Total income covered under NTR 232,000

Example From the following information calculate the tax liability of Mr. Tayyab Zahid for the tax year

2023.

Annual rent 180,000

Property tax paid 20,000

Repair of property given on rent 50,000

Solution:

Mr. Tayyab Zahid

Computation of taxable income and tax liability

For the tax year 202 3

Income from Property:

Annual rent 180,000

Deductions u/s 15A are not available where property

income does not exceed Rs. 4,000,000 of an individual & AOP

Less property tax paid -

1/5th fixed repair allowance -.

180 ,000

Computation of tax liability:

Tax on property income:

(Tax @ 0 % on Rs. 1 80 ,000) - -

6. Treatment of advances [u/s 16]:

(a) Adjustable advances:

Where the tenant paid advance which is adjustable against rent then no treatment is required

while computing the rent chargeable to tax because the same will automatically be included in

the rent chargeable to tax.

(b) Non adjustable amounts (including pugree) received in relation to buildings: [U/s 16(1),

(2) and (3)]

 Amounts received from a tenant not adjustable against rent chargeable to tax under this

section in the tax year in which it was received and the following nine tax years in equal

proportion.

 Where the above amount received by the owner refunded to the tenant on termination of the

tenancy before the expiry of ten years, no portion of the amount shall be allocated in the tax

year in which it is refunded or to any subsequent tax year except provided as under.

 Where the property is vacated and the owner let out the building or part to the succeeding

tenant and receives any amount not adjustable against rent from the succeeding tenant,

the succeeding amount as reduced by the earlier amount already charged to tax shall be

treated as rent chargeable to tax in 10 years in equal proportions. However, where the

property is vacated by the earlier tenant after the expiry of 10 years then succeeding amount

shall not be reduced by the earlier amount already charged to tax and whole amount received

from succeeding tenant shall be charged to tax in 10 years in equal proportion.

Example: Mr. Sarfraz let out his house at a rent of Rs.10,000 p.m. He received a deposit of Rs.

200,000 not adjustable against rent, out of which he refunded Rs.100,000 to previous tenant, who

vacated the house after 3 years’ tenancy.^ Calculate rent chargeable to tax^ for the tax year 20^23.^

Solution: Rs.