ISLAMABAD: The federal government has imposed income tax on income derived from rental property on both individuals and association of persons.
According to the proposals made in finance Bill 2016, rental income up to Rs0.2 million per year would be exempted from income tax.
In case the gross amount of rent exceeds Rs0.2 million but does not exceed Rs0.6 million, tax at the rate of 5.0 percent will be applicable on amount exceeding Rs0.2 million.
Where the gross amount of rent exceeds Rs0.6 million but does not exceed Rs1.0 million, tax of Rs20,000 plus 10 percent of the amount exceeding Rs0.6 million will be applicable.
For rental income between Rs1.0 million to Rs2.0 million, tax will be charged at the rate of Rs60,000 plus 15 percent of the gross amount exceeding Rs1.0 million.
For rental income exceeding Rs2.0 million, tax would be charged at the rate of Rs210,000 plus 20 percent of the gross amount exceeding Rs2.0 million.