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Hello/Assalam o Alaikum

I do not understand this rental income tax in new budget. People are saying I will be taxed 1% of my property value even if I am earning a year rental of 3% of my building value? That means effective tax of 33% which is much higher than I was paying before?

I do not understand what is happening here or why government is doing this. Any chance this law gets reversed by next year’s budget? This is very harmful for business on top of inflation we are facing. Buying rental property is not worth it like this…

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Dear Farhan,

You will be taxed 1% of the FBR value above 25 M , the FBR values are less than the actual values so it wont be 33%. Also the first 25M FBR value is exempt from any rental tax.

I would hope they change this policy in future but as of now it doesnt seem to be a possibility.

Jazak Allah

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