CAF-2 · Chapter 6 · Question 14 of 15
Mr. Usman owns 50 acres of agricultural land in Mirpur. He does not cultivate it himself but leases it to a tenant farmer for an annual rent of Rs. 2,500,000. How is this rental income treated under the Income Tax Ordinance, 2001?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) C) It is treated as agricultural income and is entirely exempt from income tax.
Explanation
Any rent received by the owner of land used for agricultural purposes is treated as agricultural income and is exempt from tax. It is not necessary for the owner to cultivate the land himself to claim this exemption.
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