CAF-2 · Chapter 9 · Question 10 of 15
Under Section 7E, resident persons are subjected to a tax on the "deemed income" arising from their capital assets (immovable property) situated in Pakistan. How is this deemed income and the corresponding tax computed?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) B) Deemed income is 5% of FMV; taxed at 20% (Effective tax of 1% of FMV).
Explanation
Deemed income shall be computed as 5% of the Fair Market Value (FBR/DC rate) of capital assets situated in Pakistan. The rate of tax on such deemed income is 20%, which translates into an effective tax of exactly 1% of the property's Fair Market Value.
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