There would be no tax on rental income where the gross amount of rent does not exceed Rs 150,000 under section 155 (Income from Properly) of the Income Tax Ordinance, 2001. According to the Federal Board of Revenue (FBR) income tax circular issued on Saturday, the following changes have been made in section 155 through Finance Act, 2013:
Firstly, the scope of prescribed person for the purposes of section 155 has been extended to include a charitable institution; a private educational institution; a boutique; a beauty parlour; a hospital; a clinic; a maternity home or individuals or association of persons paying gross rent of Rs 1.5 million and above in a year. Secondly, the rate of deduction of income tax under section 155 has been revised as follows:
The rate of tax to be deduced under section 155, in the case of individual and association of persons, shall be where the gross amount of rent does not exceed Rs 150,000, rate of tax would be nil; where the gross amount of rent exceeds Rs 150,000 but does not exceed Rs 1,000,000, rate of tax would be 10 percent of the gross amount exceeding Rs 150,000 and where the gross amount of rent exceeds Rs 1,000,000, rate of tax is Rs 85,000 plus 15 percent of the gross amount exceeding Rs 1,000,000. The rate of tax to be deduced under section 155, in the case of company shall be 15 percent of the gross amount of rent, FBR added.
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