Rental Income Tax Calculator Pakistan 2026-27

Understanding Rental Income Tax in Pakistan

Rental income from residential and commercial properties is taxed in Pakistan under the head "Income from Property" in the FBR Income Tax Ordinance 2001. The figures on this page are the tax a tenant withholds from that rent under Section 155, at the rates in Division V of Part III of the First Schedule. Withholding is computed on the gross annual rent, regardless of actual expenses like repairs, maintenance or insurance — but the landlord's own liability is not: rental income enters total taxable income after the deductions Section 15A allows, is taxed at the normal individual rates, and this withheld amount is credited against it. Nothing is withheld on the first Rs. 300,000 of a tenant's annual rent, and the rest is withheld at progressively higher rates, up to 25% for very high rent. That nil band is a withholding threshold, not an exemption: the rent still counts towards the landlord's taxable income.

For the tax year 2026-27 the rates are: rent up to Rs. 300,000 — nil. Rs. 300,001 to Rs. 600,000 — 5% of the amount exceeding Rs. 300,000. Rs. 600,001 to Rs. 2,000,000 — Rs. 15,000 plus 10% of the excess. Above Rs. 2,000,000 — Rs. 155,000 plus 25% of the excess. These rates were unchanged by the Finance Act 2026 and apply to residential and commercial properties alike. What they are, precisely: this is the table in Division V of Part III of the First Schedule, which sets the rate a tenant withholds under Section 155 — not a separate income tax on rent. The Finance Act 2021 abolished the separate rental rate table by omitting Section 15(6) and Division VIA of Part I, so rental income is now taxed at the normal individual rates as part of total income, with the Section 155 deduction credited against that bill. A landlord not on the ATL has double withheld under Rule 1 of the Tenth Schedule, which raises rates of deduction and collection — the excess is recovered on filing.

Filer vs Non-Filer on Rental Income

Being off the ATL is expensive at the point of payment: twice as much is withheld at every band. On a Rs. 1,200,000 annual rent, Rs. 75,000 is withheld from a landlord on the ATL and Rs. 150,000 from one who is not — Rs. 75,000 a year of extra cash withheld on a single property. The extra is not a penalty you keep paying: Section 155 has no final-tax provision, so it is advance tax and the over-withheld amount is credited against the annual liability and refundable under Section 170 once a return is filed. The real cost of staying off the list is the cash locked up, the return you must file to get it back, and the provisional-assessment machinery in the rest of the Tenth Schedule. For landlords with several properties the amount withheld multiplies quickly. Getting on the ATL is free, takes less than an hour, and immediately halves what is withheld at source — which is not the same as halving the tax you owe, since the excess was always recoverable; it is the difference between being paid your rent and lending the difference to FBR until you file. See our complete filer registration guide.

Withholding Tax on Rent (Section 155)

When a tenant is a company or registered business, they are required to deduct withholding tax on rent payments under Section 155 of the Income Tax Ordinance. When the landlord is a company, the WHT rate is a flat 15% of the gross rent, regardless of filer status. For individual or AOP landlords, the rate follows the same progressive slabs as the annual rental income tax (up to 25%) — applied as WHT at the time of payment and credited to the landlord's annual tax liability.

The tenant who deducts the tax deposits it with FBR using a PSID, and the landlord sees the credit in their IRIS account once FBR has processed the payment. When filing the annual return, the Section 155 tax withheld is credited against the tax calculated on the landlord's total income, after the deductions Section 15A allows. Whether it covers the whole bill depends on that total income, so this page does not say it will.

Common Rental Income Scenarios

Scenario 1 — Single small property (Rs. 25,000/month): Annual rent Rs. 300,000 — nothing is withheld, though the rent is still part of your taxable income. Scenario 2 — Mid-range property (Rs. 60,000/month): Annual rent Rs. 720,000 — Rs. 27,000 is withheld from a filer, Rs. 54,000 from a non-filer. Scenario 3 — Three properties, one tenant each at Rs. 50,000/month: Rs. 1,800,000 a year in all, Rs. 600,000 per tenant — Rs. 15,000 is withheld by each tenant, Rs. 45,000 in all from a filer and Rs. 90,000 from a non-filer, because Section 155 applies to each tenant's rent separately. Scenario 4 — Commercial property (Rs. 400,000/month): Annual rent Rs. 4,800,000 — Rs. 855,000 is withheld from a filer, Rs. 1,710,000 from a non-filer. In every case the amount withheld is credited against the landlord's own tax when they file.

Rental Tax vs Property Tax

Rental income tax (calculated by the calculator above) is the FBR federal income tax on the rent you receive. This is separate from the provincial property tax charged by the Punjab Excise and Taxation Department, Sindh Excise, or your local cantonment board. Provincial property tax is a recurring annual charge based on the property's size, location, and rental value, and goes to the provincial government rather than FBR. Both must be paid: provincial property tax for owning the property, FBR rental tax for the income you earn from it. Additionally, when selling property, capital gains tax (CGT) and withholding tax on the transaction value apply under the Property Tax Calculator.

Frequently Asked Questions