Rental Income Tax Calculator Pakistan 2026-27 — Guide
Working out rental income tax 2026-27 confuses many landlords in Pakistan — people often take the amount the tenant deducts to be their whole tax. This guide shows how the actual tax on rent is worked out, how Section 155 withholding differs from it, and how far apart the two are in real examples.
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Enter the monthly rent — see how much the tenant will deduct and how much net rent you receive.
1. Tax on Rent — Two Separate Things
The actual tax (final liability): under section 15, rent is “Income from Property”. After section 15A deductions it is added to your other income (salary, business and so on) as taxable income and taxed at the normal individual rates. The Finance Act 2021 abolished the separate rate table for rent — section 15(6) and Division VIA of the First Schedule — and the Finance Act 2026 did not bring it back.
Section 155 withholding (advance tax): if the tenant is a “prescribed person”, they deduct at these slabs when paying rent and pay it to FBR (Division V, Part III, First Schedule — for an individual or AOP landlord):
| Annual Gross Rent | Withholding |
|---|---|
| Up to Rs. 300,000 | Nil |
| Rs. 300,001 – Rs. 600,000 | 5% of amount over Rs 300,000 |
| Rs. 600,001 – Rs. 2,000,000 | Rs 15,000 + 10% of amount over Rs 600,000 |
| Above Rs. 2,000,000 | Rs 155,000 + 25% of amount over Rs 2,000,000 |
Important: above Rs 20 lakh there is a single band — Rs 155,000 + 25%. There is no 35% band above it. For a company landlord, withholding is a flat 15%. If the landlord is not on the Active Taxpayer List, the deduction is doubled under Tenth Schedule Rule 1 — but it is advance tax, adjusted or refunded when you file your return.
2. Real Examples — WHT vs the Actual Tax
Assume rent is the landlord's only income, the landlord is on the ATL, the tenant is a prescribed person, and the section 15A(1)(a) repairs allowance (1/5 of the rent) is claimed. The actual tax is at the non-salaried individual rates (TY2027). With salary or business income as well, the rate will be higher.
Example 1 — Rs 25,000 Monthly Rent
Annual Rent
Rs 300,000
Tenant WHT (§155)
Rs 0
Actual Tax
Rs 0
Income from property after the repairs allowance of Rs 60,000: Rs 240,000. No WHT and no tax.
Example 2 — Rs 50,000 Monthly Rent
Annual Rent
Rs 600,000
Tenant WHT (§155)
Rs 15,000
Actual Tax
Rs 0
Income from property after the repairs allowance of Rs 120,000: Rs 480,000. WHT exceeds the actual tax by Rs 15,000 — refunded when you file your return.
Example 3 — Rs 100,000 Monthly Rent
Annual Rent
Rs 1,200,000
Tenant WHT (§155)
Rs 75,000
Actual Tax
Rs 54,000
Income from property after the repairs allowance of Rs 240,000: Rs 960,000. WHT exceeds the actual tax by Rs 21,000 — refunded when you file your return.
Example 4 — Rs 200,000 Monthly Rent
Annual Rent
Rs 2,400,000
Tenant WHT (§155)
Rs 255,000
Actual Tax
Rs 266,000
Income from property after the repairs allowance of Rs 480,000: Rs 1,920,000. A further Rs 11,000 is payable with the return.
3. Section 155 — Who Deducts, and How Much?
The “prescribed persons” of section 155(3) — only these tenants are required to deduct tax from rent:
- Federal Government, Provincial Government, Local Government
- Company
- Non-profit organization or charitable institution
- Foreign diplomatic mission
- Private educational institution, boutique, beauty parlour, hospital, clinic or maternity home
- An individual or AOP paying gross rent of Rs 15 lakh (1.5 million) or more a year
- Any other person notified by FBR
| Item | Detail |
|---|---|
| Rate | Individual/AOP landlord: the slabs above. Company landlord: 15% |
| On what amount? | Gross rent, including rent for furniture/fixtures and property-related services, and advance payments too |
| Landlord not on the ATL? | The deduction is doubled (Tenth Schedule Rule 1) |
| What it means for you | Advance tax — adjusted against the actual tax in your annual return |
| Refund? | Yes, if too much was deducted, by filing your return (section 170) |
Important: Section 155 WHT and the actual tax on rent are different things. Even if the tenant deducted nothing, the rent is your income. And what was deducted is not final — it is credited against the actual tax in your return.
4. How to Use the Rental Calculator
Our calculator works out section 155 withholding — not the final income tax. The calculator says so itself.
- Open the rental calculator
- Choose the mode — monthly or annual rent
- Enter the rent amount — the rent for one property
- Number of properties — the calculator adds the rents together and applies the slabs to one total (remember that in reality each prescribed tenant deducts on their own payment)
- FBR Active Filer — turn the switch off if you are not on the ATL
- Results:
- Annual WHT §155 — how much the tenant will deduct over the year
- Net Rent / Month — after the deduction
- The effective rate and your slab
- The extra withholding if you are not on the ATL
5. Overseas Pakistani Landlords
If you live abroad and have property in Pakistan rented out:
What the Law Says
- ✅ Rent from property in Pakistan is Pakistan-source income (section 101(9)) — residence makes no difference
- ✅ The same section 15 / 15A calculation applies
- ✅ The return is filed online on IRIS
- ✅ Excess WHT is adjusted or refunded through the return
Keep in Mind
- ⚠️ If you are not on the ATL, a prescribed tenant will deduct double WHT
- ⚠️ If the rent is set low, section 15(4) can take the fair market rent instead
- ⚠️ Declare the property in your wealth statement
- ⚠️ The return deadline for individuals is 30 September (section 118)
6. FAQ — Rental Income Tax Pakistan 2026-27
Q1. How much tax applies to rental income in Pakistan in 2026-27?
There are two separate things. (1) The actual tax: rent is "Income from Property" (section 15), which after section 15A deductions is added to your other income as taxable income and taxed at the normal individual rates — the Finance Act 2021 abolished the separate rate table for rent (section 15(6) and Division VIA). (2) Section 155 withholding: if the tenant is a "prescribed person" (a company, government, school, hospital, or an individual paying more than Rs 15 lakh of rent a year, among others), they deduct tax at the Division V slabs — nil up to Rs 300,000, then 5%, 10%, and above Rs 20 lakh Rs 155,000 + 25%. This is advance tax, adjusted against the actual tax. Example: on Rs 100,000 monthly rent, with rent as the only income, WHT of Rs 75,000 is deducted while the actual tax comes to Rs 54,000.
Q2. Is rental tax different for residential and commercial property in Pakistan?
Not for income tax. Under the Income Tax Ordinance 2001, rent from both falls under the same "Income from Property" head, and section 155 withholding is the same for both. Provincial property tax (Punjab's or Sindh's) is a separate tax charged by the province.
Q3. What is Section 155 and how does it apply to rental income?
Section 155 puts the withholding duty on the tenant. If the tenant is a "prescribed person" under section 155(3), they deduct tax from the gross rent (including furniture, fixtures and services related to the property) and pay it to FBR. The rate depends on the type of landlord: the Division V slabs for an individual or AOP landlord, 15% for a company landlord. If the landlord is not on the Active Taxpayer List, the deduction is doubled under Tenth Schedule Rule 1. It is not a final tax — it is credited in the landlord's annual return, and any excess is refunded under section 170.
Q4. If the tenant is an individual, is WHT deducted?
Usually not — but not in every case. Under section 155(3)(vib), an individual or AOP paying gross rent of Rs 15 lakh (1.5 million) or more a year is also a prescribed person and must deduct tax. Private schools, boutiques, beauty parlours, hospitals, clinics and maternity homes are on the list too. Even where no WHT is deducted, the rent is your income and must be declared in your return.
Q5. Do overseas Pakistanis pay tax on rental income in Pakistan?
Yes. Under section 101(9), rent from the lease of immovable property in Pakistan is Pakistan-source income, so it is taxable in Pakistan wherever the landlord lives. The same section 15/15A calculation applies. If the tenant is a prescribed person, section 155 WHT is deducted, and it is doubled if the landlord is not on the Active Taxpayer List. The return is filed online on IRIS.
Q6. How do I calculate my tax with the rent tax calculator?
TaxCalc PK's rental calculator (taxcalcpk.com/rental-income-tax-calculator) works out section 155 withholding: enter monthly or annual rent, the number of properties and your ATL status, and it shows the Annual WHT, net rent per month, the effective rate and the extra withholding if you are not on the ATL. It is not the final income tax — the calculator says so itself. For the actual tax, take the rent (after section 15A deductions) together with your other income at the normal rates.
Q7. Is a non-refundable advance or security deposit taxed?
Under section 16, an amount received from a tenant that is not adjustable against rent is treated as rent and is taxable in equal parts over the year of receipt and the next nine years. If the tenancy ends before ten years and the amount is refunded, the share for the remaining years is no longer taxable. A deposit forfeited under a contract for the sale of the property is also included in rent under section 15(2).
Q8. Is rent from multiple properties calculated together?
For the actual tax, yes — income from property from all your properties is added to your taxable income. For section 155 withholding, each prescribed tenant deducts on the rent they themselves pay, because section 155(1) speaks of deduction from the "gross amount of rent paid".
Q9. Can renovation or repair expenses be deducted?
Section 15A(1) allows specific deductions: an allowance of one-fifth (1/5) of the rent for repairs, building insurance premium, local tax or cess on the property, ground rent, profit on money borrowed to buy, build or renovate the property or mortgage interest, administration and collection costs of up to 4% of the rent, legal fees for defending title, and, on certain conditions, unpaid rent. The actual repair bill is not deducted separately — the 1/5 allowance takes its place.
Q10. Do I still pay tax if the tenant is not paying rent?
Section 15(1) taxes rent "received or receivable", so simply not receiving rent does not remove the tax. Section 15A(1)(j) allows an allowance for unpaid rent — on condition that the tenancy was bona fide, the tenant has vacated or steps have been taken to evict them, legal proceedings to recover it have been taken (or would be futile), and the rent was included in that year's income and taxed. If it is recovered later, it is taxable in that year. Consult a tax practitioner about your own case.
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