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 tax is calculated on the gross annual rent using the progressive slabs set out in Division II of Part I of the First Schedule, regardless of actual expenses like repairs, maintenance, or insurance. The first Rs. 300,000 of annual rent is fully exempt from tax — a meaningful threshold for smaller landlords. The remaining rent is taxed at progressively higher rates up to 25% for very high rental income.

For the tax year 2026-27, the slabs are: rent up to Rs. 300,000 — 0% (exempt). 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. Non-filers pay double the filer rate at every bracket. These rates were unchanged by the Finance Act 2026 and apply to residential and commercial properties alike.

Filer vs Non-Filer on Rental Income

The non-filer penalty on rental income is particularly severe: you pay exactly double the filer tax at every slab. On a typical Rs. 1,200,000 annual rent, a filer pays Rs. 75,000 while a non-filer pays Rs. 150,000 — a difference of Rs. 75,000 per year on a single property. For landlords with multiple properties, the savings from filer status multiply quickly. Becoming an FBR filer is free, takes less than an hour, and immediately halves your rental tax liability. 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 WHT deducted by the tenant must be deposited with FBR by the 15th of the following month through the IRIS portal using a PSID. The landlord sees the WHT credit in their IRIS account once FBR has processed the payment. When filing the annual return, the WHT automatically adjusts against the calculated tax. Most landlords find that the WHT already covers their full rental tax liability if they have only one or two properties at moderate rent levels.

Common Rental Income Scenarios

Scenario 1 — Single small property (Rs. 25,000/month): Annual rent Rs. 300,000 — fully exempt from tax. Scenario 2 — Mid-range property (Rs. 60,000/month): Annual rent Rs. 720,000 — filer pays Rs. 27,000, non-filer pays Rs. 54,000. Scenario 3 — Multiple properties (Rs. 150,000/month total): Annual rent Rs. 1,800,000 — filer pays Rs. 135,000, non-filer pays Rs. 270,000. Scenario 4 — Commercial property (Rs. 400,000/month): Annual rent Rs. 4,800,000 — filer pays Rs. 855,000, non-filer pays Rs. 1,710,000.

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