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

1
Brochure - 004 Taxation of Income from Property
General Concepts of Taxation
The Federal levy on income (Income Tax), with
effect from July 01, 2002, is governed by the
Income Tax Ordinance, 2001 and Income Tax
Rules, 2002. It is an annual charge on the
taxable income for a tax year, if it exceeds the
maximum amount that is not chargeable to
tax.
“Taxable Income” means total income as
reduced by deductible allowance on account of
Zakat paid under the Zakat and Usher
Ordinance, 1980 other than Zakat paid on a
debt, the profit of which is chargeable to tax
under the head “Income from Other Sources”
and the deduction is admissible against such
profit on debt.
“Total Income” is the sum of income under the
following heads:
• Salary;
• Income from property;
• Income from business;
• Capital gains; and
• Income from other sources [like
dividend, royalty, profit on debt, rent
from sub-lease of land or building,
income from lease of any building
together with plant or machinery, prize
on prize bond, winnings from a raffle,
lottery or crossword puzzle, or a loan,
advance, deposit or gift (subject to
certain conditions)].
Income under a specific head for a tax year is
the total of the amounts derived under that head,
which are chargeable to tax, as reduced by the
deductions, if any, admissible under the Income
Tax Ordinance, 2001.
However, certain incomes are subject to
separate taxation, or subject to collection or
deduction of tax at source and treated as a final
tax. These are excluded from the ambit of
taxable income e.g.: -
• Dividend received from a company; and
• Prize on a prize bond; or winnings from
raffle, lottery, quiz or crossword puzzle; or
2
Brochure - 004
prize offered by companies for promotion
of sales.
The scope of total income under the Income Tax
Ordinance, 2001 is determined with reference to
residential status of a taxpayer. In case of
resident individual it is both Pakistan source
income and foreign source income, while in
case of non-resident individual it is restricted
to Pakistan source income only.
An individual is “resident individual” if:
a. he is present in Pakistan for 182 days or
more in a tax year; or
b. he is an employee or official of the
Federal or Provincial Government
posted abroad in a tax year.
An individual is “non-resident” if he is not a
resident individual.
In order to compute the number of days an individual is
present in Pakistan in a tax year, the following rules apply: -
• A part of a day that an individual is present in
Pakistan (including the day of arrival in, and the day
of departure from, Pakistan) counts as a whole day
of such presence; However, a day or part of a day
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
Pakistan.
• The following days in which an individual is wholly or
partly present in Pakistan count as a whole day of
such presence:-
- a public holiday;
- a day of leave, including sick leave;
- a day that the individual’s activity in Pakistan
is interrupted because of a strike, lock-out or
delay in receipt of supplies; or
- a holiday spent by the individual in Pakistan
before, during or after any activity in
Pakistan; and
“Pakistan source income” is defined in section
101 of the Income Tax Ordinance, 2001, which
caters for incomes under different heads and
situations. Some of the relevant Pakistani
source incomes are as under: -
• Property or rental income from the lease
of immovable property in Pakistan;
• Dividend paid by resident company;
• Profit on debt paid by a resident person;
Taxation of Income from Property
“Foreign source income” is all such incomes,
which are not Pakistan source income.
If an employee or official of the Federal
Government or a Provincial Government is
posted abroad, his residential status remains
“resident” irrespective of his period of stay in
Pakistan. This makes both Pakistan and foreign
source income liable to income tax.
“Tax Year” is a period of twelve months ending
th
on 30 day of June i.e. the financial year and is
denoted by the calendar year in which the said
date falls. For example tax year for the financial
year from July 01, 2003 to June 30, 2004 shall
be denoted by calendar year 2004.
“Maximum amount that is not chargeable to
tax” for the year 2004 is Rs. 80,000 of taxable
income derived from all sources taken together.
If there is property income of Rs. 60,000, salary
income of Rs. 18,000 and profit on debt (interest
etc) of Rs. 3,000 this will result into taxable
income of Rs. 81,000, which exceeds the
maximum amount that is not chargeable to tax.
Effective from tax year 2005, the maximum
amount that is not chargeable to tax stands
enhanced to Rs. 100,000 of taxable income
derived from all sources taken together.
Agricultural Income is taxed by the Provincial
Governments. If an individual enjoys agricultural
income exceeding Rs. 80,000 then his income
greater than ‘zero’ from all sources taken
together (excluding agricultural income) will be
chargeable to tax under the Income Tax
Ordinance, 2001. If income from property is Rs.
20,000 and agricultural income exceeds Rs.
80,000, then salary income of Rs. 20,000 will be
liable to charge of income tax.
“Agricultural income” is defined broadly to include direct
and indirect income from land situated in Pakistan used for
agriculture. Rental income for the use of cultivated land, rent
for a building on or in the vicinity of cultivated land if the
building is occupied by the cultivator or by the receiver of
rental income from cultivated land are some of the examples
of indirect income.
Loan, advance, deposit or gift received in a
tax year from another person otherwise than:
• By a crossed cheque drawn on a bank; or
3
Brochure - 004
• Through a banking transaction from a
person holding a National Tax Number
Card;
is treated as income chargeable to tax under the
head “income from other sources”.
The purpose is to document the transactions on
account of loan, advance, deposit or gift
reflected in the Wealth Statement or
Reconciliation of Wealth. The following
transactions, however, are excluded:
• Loan, advance, deposit or gift received
from a banking company or an institution
notified under the Companies Ordinance,
1984 by the Federal Government in the
official gazette as a ‘financial institution’; or
• Advance payment for the sale of goods or
supply of services.
Self-hiring – When an employee gives on rent
any building (house/flat/apartment etc.) owned
by him or his spouse to the employer and the
employer provides the same against the
employee’s entitlement for a rent-free
accommodation or housing, it results into:
• Provision of a perquisite by the employer
to the employee chargeable as income
from “salary”; and
• Receipt of rent of land or building by the
employee or his spouse, as the case may
be, chargeable as income from “property”.
Recouped expenditure or loss is the income
of the tax year in which it is received in cash or
in kind and chargeable under the head of
income where deduction for such expenditure or
loss was allowed in computing the chargeable
income of an earlier year.
Double derivations and double deductions-
Any amount chargeable to tax on the basis of
being receivable shall not be again chargeable
on the basis that it is received or vice versa.
Similarly any expenditure deductible on the
basis of being payable shall not be again
deductible on the basis that it is paid or vice
versa.
Taxation of Income from Property
Income from Property
Applicable provisions of law for the
computation of “Income from Property” are
sections 15, 16 and 17 of the Income Tax
Ordinance, 2001.
“Income from property” is computed on the basis
of actual rent received or receivable for the
period the land or building remained in the use
or occupation of, or right to use or occupy by the
tenant;
Rent of land (open plot) is also chargeable
under the head “income from property”;
Forfeited deposit under a contract for the sale of
land or a building is also now chargeable under
the head “income from property”;
Deductions allowed in computing income from
property can be claimed either on the basis of
actually paid during the tax year or on the basis
of payable for the corresponding tax year; and
Liabilities in respect of deductions allowed on
payable basis are to be included in chargeable
income, if not paid within three years.
“Income from property” comprises of:
• rent received or receivable by the owner for
a tax year;
• amounts not adjustable against the rent
received from the tenant;
• subsequent recovery of irrecoverable
unpaid rent earlier allowed as deduction;
and
• unpaid liability in respect of a deduction
for an expenditure earlier allowed on
payable basis, if not paid within three years.
Rent is the amount received or receivable by the
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; and
• any forfeited deposit received under a
contract for the sale of land or a building.
4
Brochure - 004
However:
• rent of a building let out together with plant
and machinery is specifically excluded and
is chargeable under the head “income from
Other Sources”.
• any amount included in the rent for the
provision of amenities, utilities or any other
service connected with the renting of the
building is specifically excluded and is
chargeable under the head “income from
Other Sources”.
• where the rent received or receivable is less
than the fair market rent of the property,
the owner will be treated as having derived
the fair market rent for the period the
property is let on rent in the tax year.
Fair market rent is the consideration for the use
or occupation of, or the right to use or occupy
the land or building which it would ordinarily
fetch in the open market at that time.
Advance rent received during a tax year is
chargeable to tax only to the extent it relates to
that tax year. Unadjusted balance of advance
rent is chargeable to tax in the following tax year
(s) to which it relates.
Amount not adjustable against the rent
received by the owner of a building, from a
tenant is treated as rent chargeable to tax in the
tax year in which it was received and the
following nine years in equal proportion i.e. one-
tenth of the amount is treated as rent received of
the building for ten years commencing from the
year in which it was received. Generally such
amounts are both non-refundable and
refundable goodwill or security deposit by
whatever name called.
In case the amount not adjustable against the
rent is refunded to the tenant on termination of
the tenancy before the expiry of ten years and,
• no further similar amount is received from
the succeeding tenant or the land or building
is not further let out, no portion of the
amount is treated as rent received for
inclusion in the chargeable income of the tax
year in which it is refunded and in any
subsequent tax years.
Taxation of Income from Property
• a further similar amount is received from the
succeeding tenant, the amount received
from the succeeding tenant as reduced by
such portion of the amount already treated
as rent received from the preceding tenant,
is treated as rent chargeable to tax in the tax
year in which further similar amount is
received and the following nine years in
equal proportion.
The adjustment of the portion of the amount
already treated as rent received of the building
from the preceding tenant against the amount
received from the succeeding tenant can only be
made if the change in tenancy takes place
before expiry of ten years in which such amount
was received from the preceding tenant.
Subsequent recovery of irrecoverable unpaid
rent earlier allowed as a deduction is income
chargeable to tax in the tax year in which it is
wholly or partly recovered.
Un-paid liability in respect of a deduction for
an expenditure earlier allowed on the basis of
being payable that remains unpaid within three
years of the end of the tax year in which the
deduction was allowed is treated as income
chargeable to tax in the first tax year following
the end of the said three years.
Ownership of land or building has a direct
nexus with “income from property”. This means
that any amount received or receivable as
consideration for the use or occupation, or the
right to use or occupy, of any land or building
which is owned by the taxpayer is chargeable
under this head of income. While similar
consideration for any land or building not
owned by the taxpayer falls under the head
“income from Other Sources” e.g., sub-letting.
Joint owners – Where two or more persons
own any land or building with their respective
shares definite and ascertainable, the income
from property is not chargeable to tax jointly as
an association of persons. This effectively
means that such persons are not required to
submit a return of income in respect of a jointly
owned land or building given on rent in the
status of joint owners. In fact, each joint owner is
required to include his share in the income or
loss from jointly owned land or building in his
own return of income and computation of
taxable income.
5
Brochure - 004
However, this rule does not apply to income
chargeable under t he head “income from
business” i.e. business of renting out of land or
building.
Deductions for expenditures or allowances
allowed in computing the “income from property”
are as follows:
• Repairs allowance equal to one-fifth of the
rent of the building chargeable to tax. This is
a fixed allowance admissible against the
rent irrespective of the amount if any,
expended on the repairs of the building;
• Premium paid or payable to insure the
building against the risk of damage or
destruction;
• Local rate, tax, charge or cess paid or
payable in respect of the land or building to
a local authority or government not being the
tax payable under the Income Tax
Ordinance, 2001;
• Ground rent paid or payable in respect of
the land or building;
• Profit (interest / mark-up) paid or payable
on money borrowed, including by way of
mortgage, to acquire, construct, renovate,
extend or reconstruct the land or building;
• Share in rent or share towards appreciation
in value of land or building paid or payable
to House Building Finance Corporation or a
scheduled bank for their capital contribution
to acquire, construct, renovate, extend or
reconstruct the land or building under a
scheme of investment in property;
• Profit (interest / mark-up) paid on a property
subject to mortgage or other capital charge;
• Collection charges on account of
expenditure (not exceeding six percent of
the rent chargeable to tax) paid or payable
for the purpose of collecting the rent due in
respect of the land or building;
• Legal charges i.e. expenditure for legal
services acquired to defend the title to the
land or building or any suit in a court
connected with the land or building in a
court;
Taxation of Income from Property
• Irrecoverable unpaid rent of the land or
building subject to the conditions that –
- The tenancy was bonafide;
- The defaulting tenant has vacated or
steps have been taken to compel the
tenant to vacate the land or building:
- The defaulting tenant is not in
occupation of any other land or building
owned by the same person;
- All reasonable steps have been taken to
institute legal proceedings for the
recovery of the unpaid rent or there are
reasonable grounds to believe that legal
proceedings would be useless; and
- The amount of irrecoverable unpaid rent
was included in the chargeable income
under the head “income from property”
of the relevant tax year in which the rent
was due and tax thereon was duly paid.
Unpaid liability or part of the liability
subsequently paid, which was earlier treated
as income chargeable to tax, (being not paid
within three years), is allowed as a deduction in
the tax year in which the payment is made.
Basis of deduction for expenditures is either:
• Actually paid during the tax year; or
• Payable for the corresponding tax year.
No claim for any expenditure can be made while
computing income under any other head once a
deduction for the same expenditure is allowed
under the head “income from property”.
Deductions not admissible
• Any allowance or expenditure other than
those mentioned hereinabove;
• Expenditure otherwise specifically
deductible, e.g.,
o Salary of an employee engaged for collecting rent:
- exceeding Rs. 5,000 per month unless paid
through crossed cheque or direct transfer of
the funds to the employee’s bank account; or
Brochure - 004
- exceeding the maximum amount that is not
chargeable to tax (at present Rs.80,000 per
annum) unless tax is deducted at source.
st
Effective from 1 July, 2004, the limit of
Rs. 5,000 mentioned above stands
enhanced to Rs. 10,000
o Expenditures exceeding Rs. 5,000 in
respect of insurance premium, profit on
money borrowed, share in rent and
share towards appreciation in value of
land or building, collection charges or for
legal services, where the total claim in a
tax year exceeds Rs. 50,000, unless
payments exceeding Rs. 5,000 are
made by a crossed cheque or crossed
bank draft.
Apportionment of expenditure is necessitated,
on a reasonable basis taking account of the
relative nature and size of the activities to which
the expenditure relates i.e.:
• Deriving incomes under more than one head
of income; or
• Deriving incomes comprising taxable
income, exempt income, class of incomes
subject to separate taxation or class of
incomes subject to collection or deduction of
tax as a final tax; or
• Deriving income chargeable to tax and for
some other purposes.
In case of “income from property” the most
common situations involving apportionment of
expenditures are:
• Land or building not available for rent for a
full year:
- The land or building (holiday home) that
is in owner’s residential use for a part of
a year (on seasonal or need basis) and
rented out for a part of year when it is
not in owner use.
not
• Land or building partly rented out and partly
used for some other purposes:
- The land or building that is partly given
on rent and is partly in own business
use.
6
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

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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