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Advance Rent Of Many Year
01-19-2011, 06:22 PM
Post: #1
Advance Rent Of Many Year
Is rent received in advance for more than one tax year taxable in entirety in the year when received? Give proper reason and also mention the relevant section.
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01-21-2011, 07:04 PM
Post: #2
 
Read Section 155
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01-25-2011, 05:21 PM
Post: #3
 
being a deduction at source "Tax will be deducted for whole amount". In the coming year owner has to file nil return.
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02-02-2011, 02:48 PM
Post: #4
 
Dear,

As far as ITO is concerned, there is no such specification as to how these transactions be settled.

However, similar situation is existed in secion 89, where such income is to be treated on the discretion of tax payer.

The same may be applicable to you that you may either pay the tax on whole amount of fair market rent in the year of receipt or you may split the receipt into number of years for which it has been received.

To my apprehension, the second of the two methods will be a viable option for you, provided you are an individual, since in such a case, primary exemption limit of Rs. 150,000 will be applicable to you, and tax will have to be paid on rest of the amount i.e. exceeding Rs. 150,000.


Best Regards,

Faisal.
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02-02-2011, 06:38 PM
Post: #5
 
155. Income from property. — (1) Every prescribed person making a payment in full or part (including a payment by way of advance) to any person on account of rent of immovable property (including rent of furniture and fixtures, and amounts for services relating to such property) shall deduct tax from the gross amount of rent paid at the rate specified in Division V of Part III of the First Schedule.
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02-06-2011, 09:38 PM
Post: #6
 
As per ITO, 2001 Rent is taxable on receipt basis, therefore Rent "Received in Advance" shall be taxable in the year of receipt however in the subsequent years there will be No "Receipt" therefore no tax.

As far as reference is concerned refer Sections 15 and 16 of ITO, 2001.

Hope this answered your query.
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02-07-2011, 06:49 PM
Post: #7
 
<blockquote id="quote"><font size="1" face="Verdana, Arial, Helvetica, san" id="quote">quote<hr height="1" noshade id="quote"><i>Originally posted by LapTop</i>
<br />155. Income from property. — (1) Every prescribed person making a payment in full or part (including a payment by way of advance) to any person on account of rent of immovable property (including rent of furniture and fixtures, and amounts for services relating to such property) shall deduct tax from the gross amount of rent paid at the rate specified in Division V of Part III of the First Schedule.
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Dear Laptop,
The material, which you have copied from the ordinance, does not indicate the proper reply of the poster, since poster asked regarding treatment of "rent receipt for more than a year".

The statement (i.e. including a payment by way of advance) written in section 155, does not mean what you perceived, rather it means; if rent is received in advance for a particular tax year, then tax will have to be withheld in advance for that particular tax year.

Let me further clarify; where there is no specification regarding an issue in ITO, then such issues are always settled in favor of Tax Payer rather than tax payee, so the most favorable treatment is better known to the poster which he must have ascertained from my earlier reply.



<blockquote id="quote"><font size="1" face="Verdana, Arial, Helvetica, san" id="quote">quote<hr height="1" noshade id="quote"><i>Originally posted by Sayub</i>
<br />As per ITO, 2001 Rent is taxable on receipt basis, therefore Rent "Received in Advance" shall be taxable in the year of receipt however in the subsequent years there will be No "Receipt" therefore no tax.

As far as reference is concerned refer Sections 15 and 16 of ITO, 2001.

Hope this answered your query.
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Dear Sayub,

Glad to see a new member, having some insight knowledge to strengthen the forum and help the viewers at large.

However, in this particular case, i would be anxious to know your views as to where there is written that "Rent is taxable on receipt basis"?

Furthermore, section 15, interalia, in its sub section 1, specifically states that rent will be chargeable when the same has been received or receivable.

The emphasis is on the word "receivable" for your reference.

Here section 15(1) is being quoted verbatim "The rent received or receivable by a person for a tax year, other than rent exempt from tax under this Ordinance, shall be chargeable to tax in that year under the head - Income from Property".

Unquoted

On the basis of aforesaid section; tax will have to be paid(if applicable) on the basis of fair market rent, whether the same has physically been received or not. Similarly, where tax has been received in a tax year with regard to subsequent tax year(s), then income will be shown in either year, based on tax payer's discretion, and this is irrespective of whether tax has been withheld by the payer or not.

Let me know, should you need further clarifications.


Best Regards,

Faisal.
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02-07-2011, 08:17 PM
Post: #8
 
Faisal bhai,
ik bat samajh nahi aai, agar withholding agent Advance payment kary ga, chahy 2 ya 3 sal ki, to us k pass kya jawaz ho ga k us nay pory amount par tax withhold kyon nahi kiya?
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02-09-2011, 06:11 PM
Post: #9
 
<blockquote id="quote"><font size="1" face="Verdana, Arial, Helvetica, san" id="quote">quote<hr height="1" noshade id="quote"><i>Originally posted by LapTop</i>
<br />Faisal bhai,
ik bat samajh nahi aai, agar withholding agent Advance payment kary ga, chahy 2 ya 3 sal ki, to us k pass kya jawaz ho ga k us nay pory amount par tax withhold kyon nahi kiya?
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Dear Laptop,

A professional consultant, like you, should at least consider the query of the querier properly as to what has been asked by the querier, before replying.

Please read the query again i.e. "Is rent received in advance for more than one tax year taxable in entirety in the year when received? Give proper reason and also mention the relevant section".

It is quite clear that Muhammad Rehman wants to know from the recipient's point of view and even then you are replying (in your both replies) with regard to payer/withholding agent's point of view. Muhammad Rehman has no concern (in this query) as to which treatments should be followed by tenant / withholding agent. Had he asked any other thing then my reply would have been accordingly.

Furthermore, the query which you have asked me, is entirely another issue, i will surely reply your query if such need is arisen.


Keep up the good work, which you do.


Best Regards,

Faisal.
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02-09-2011, 06:23 PM
Post: #10
 
Faisal bhai mery sawal ka jawab nahi diya aap nay..
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02-09-2011, 06:34 PM
Post: #11
 
<blockquote id="quote"><font size="1" face="Verdana, Arial, Helvetica, san" id="quote">quote<hr height="1" noshade id="quote"><i>Originally posted by LapTop</i>
<br />Faisal bhai mery sawal ka jawab nahi diya aap nay..
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I said, i will reply you if such need is arisen (read the last line of my earlier post).

Furthermore, Initiate your issue separately at new thread, i will surely reply, provided you do not intend to create a nugatory debate over the issue.

Regards,

Faisal.
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