Rental income tax,

---

Rental income tax is
quite low in Pakistan

INDIVIDUAL TAXATION
Nonresident individuals are taxed only on their Pakistani-sourced income. Married couples are taxed separately, joint taxation is not allowed in Pakistan.

The tax year is the 12-month period ending on 30 June and is denoted by the calendar year in which it ends. For example, the period from 1 July 2010 to 30 June 2011 is known as the tax year 2011.

INCOME TAX
Rental Income Tax
As of 2007, income from property is subject to a presumptive tax regime. Income from leasing property is subject to a 5% final withholding tax levied on the gross rent.

Individuals earning rental income not exceeding PKR150,000 (US$1,729) are exempted from taxation if they have no other sources of income.

CAPITAL GAINS
Capital gains realized by individuals from selling real property are not taxed in Pakistan unless sales of real property are part of the individual’s business.

Capital gains in connection with a taxpayer’s business activities are considered as business income and taxed accordingly.



PROPERTY TAX


Property Tax
Property tax is a provincial tax levied on the value of property. It is generally levied at a flat rate of 10% but the tax rates vary, depending on the province.

Property tax is levied at progressive rates in the Punjab province.

In the province of Sindh, property tax is levied at a flat rate of 20% on the annual rental value of the land and building.

Capital Value Tax
Individuals who purchase real property in urban areas or acquire the right to use the real property for more than 20 years are liable to pay capital value tax. The tax is levied at 4% on the property’s recorded value. If no property value is recorded, the tax is levied at PKR50 (US$0.58) per square yard of the property.