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Mr. Muhammad Younus Ghazi B.Com (Hons); M. Com; FCA Chartered Accountant Multan

PAKISTAN TAX BAR ASSOCIATION Presentation on Income from Property and Deductions at PTBA Summer Camp-2009 by. Mr. Muhammad Younus Ghazi B.Com (Hons); M. Com; FCA Chartered Accountant Multan. Income from property and deductions. Basis of charge (sec. 15) Necessary condition

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Mr. Muhammad Younus Ghazi B.Com (Hons); M. Com; FCA Chartered Accountant Multan

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  1. PAKISTAN TAX BAR ASSOCIATIONPresentation on Income from Property and Deductionsat PTBA Summer Camp-2009by Mr. Muhammad Younus Ghazi B.Com (Hons); M. Com; FCA Chartered Accountant Multan

  2. Income from property and deductions • Basis of charge (sec. 15) • Necessary condition • Land or building (Sec. 15(2)) • Person should be owner of the property • Where letting out is subservient and incidental to the business • Self occupied houses where rent is also receivable by the owner (Sec. 15(5))

  3. Income from property and deductions • Fair market rent – determination of (Sec. 15(4)) • Treatment of non adjustable amounts (Sec. 16(1) to 16(3)) • Non adjustable advance rent or pugree or security • If tenant vacates the premises before the expiry of ten years (Sec. 16(2)) • Where on vacancy before 10 years, non adjustable sum is received from a new tenant (Sec. 16(3))

  4. Income from property and deductions • Exemptions in respect of certain properties • Any income of a trust or a welfare institution or a non profit organization (Cl. (58), Part 1,2nd Sch.) • Exemption in respect of income from property held under trust etc, for religious and charitable purposes (Cl. (59), Part 1,2nd Sch.) • Deduction at source in respect of certain properties (Sec. 155) • Permissible deductions (Sec. 17)

  5. Income from property and deductions • Liability in case of co-owners (Sec. 66) • Definite and ascertainable shares (Sec. 66)

  6. Law Involved • Sections 15,16,17,66,67,101(9), 155 involved. • 1st Schedule – Rate of Tax • 2nd Schedule Part I clauses 58 and 59 - Exemptions

  7. Basis of charge • Normal income after allowing admissible deduction • Uptil 30-6-2005 (Y.T. 2006) • Separate Block of income Tax @ 5% of Gross • amount of Rent (Full and Final Discharge) • From 1-7-2006 (Tax Year 2007 on wards) • Section 17 Deleted as Taxation was on Gross • Rental Income, • Progressive Rate of Tax in Final Discharge • From 1-7-2008 (Tax Year 2009) • Notional concept of ALV (Annual letting value) • Uptil (30-6-2002) • Actual Concept (Received or Receivable) • From 1-7-2002 (T.Y. 2003 onwards

  8. Rent • Received on Reward by Owner of Land and • Building • Consideration for use or Occupation or Right • to use or occupy • Includes forfeited deposit for sale of Land or building

  9. Fair Market Value • It is a Deeming provision. • It applies when rent received is less than fair market • value (FMV) Section 15(4) • This provision will not apply where FMV is • included in Salary Income Section 15(5)

  10. Income from property and Its Computation

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