ISLAMABAD: The rate of the proposed tax on deemed rental income would be 20 percent under the Finance Bill, 2022. The proposed tax on deemed income from an unutilised property above Rs25 million would not be applicable on the self-owned agricultural land where agriculture activity is carried out.

Under the Finance Bill 2022, tax on deemed income from an unutilized property above Rs25 million including luxury farmhouses has been proposed to be imposed.

A new section 7E (Tax on deemed income) has been proposed to be added to the Income Tax Ordinance 2001.

For the tax year 2022 and onwards, a tax shall be imposed at the rates specified in Division VIIIC of Part-I of the First Schedule, on the income specified in this section.

Budget 2022-23: here are revised tax rates and slabs for the salaried income group

Under the new law, a resident person shall be treated to have received rent equal to five percent of the fair market value of an immovable property situated in Pakistan whether such property has actually been rented out for any consideration or not. This section shall not apply to one self-owned immovable property; self-owned business premises from which business is carried out; self-owned agriculture land where agriculture activity is carried out by a person but does not include farmhouse and land annexed thereto; where the fair market value of the property or properties, in aggregate, does not exceed Rs25 million; A Provincial Government, a Local Government, a local authority or a development authority; land development and construction projects of builders and developers registered with Directorate General of Designated Non-Financial Businesses and Professions of Board; a property which is subject to tax under section 15 of the Ordinance and the tax chargeable is more than tax chargeable under this section.

Provided that if tax chargeable under section 15 is less than the tax chargeable under this section so much of the amount of tax that is in excess of tax chargeable under section 15 shall be paid under this section.

The Federal Government may include or exclude any person or property for the purpose of this section, the FBR added.

Copyright Business Recorder, 2022