Karachi, August 28, 2024 – The Federal Board of Revenue (FBR) has provided a comprehensive explanation of the tax implications on income derived from property for the tax year 2024-25. This clarification follows the issuance of the updated Income Tax Ordinance, 2001, which is effective as of June 30, 2024. The FBR has specifically outlined that income from property is governed under Section 15 of the Ordinance. This section details the circumstances under which property income is taxable and offers clarity on what constitutes “rent” for tax purposes. Under Section 15(1), any rent received or receivable by a person within a tax year, except rent that is exempt under the Ordinance, will be taxable under the head “Income from Property.” This means all rental income, unless specifically excluded by the law, is subject to taxation. Section 15(2) provides a more detailed definition of what qualifies as “rent.” It states that rent encompasses any amount received or receivable by the owner of land or a building as consideration for its use, occupation, or the right to use or occupy it. This also includes any forfeited deposits paid under a contract for the sale of land or a building. However, the FBR highlights exceptions to this rule in Section 15(3). If a building is leased out together with plant and machinery, any rent received for such a lease is not classified as income from property. Instead, it is taxed under the head “Income from Other Sources.” Further, Section 15(3A) addresses situations where rental income includes amounts for amenities, utilities, or other services connected with the property. In…