What is the tax rate on rental income in Pakistan?

For an individual or AOP landlord, section 155 withholding runs on four slabs: nil on annual rent up to Rs 300,000; 5% on rent above Rs 300,000 up to Rs 600,000; Rs 15,000 plus 10% up to Rs 2,000,000; and Rs 155,000 plus 25% above Rs 2,000,000. A company landlord is withheld a flat 15% on gross rent with no exempt threshold. That withholding is an advance, not your final tax. Your actual liability is computed under section 15 on net property income — gross rent less the deductions section 15A allows — taxed at the normal individual slab rates. The calculator above shows both figures and the difference between them.

How much tax is deducted on Rs 100,000 monthly rent?

Rs 100,000 a month is Rs 1,200,000 a year. For an individual filer, section 155 withholding is Rs 15,000 plus 10% of the Rs 600,000 above the Rs 600,000 threshold — Rs 75,000 for the year, or Rs 6,250 a month. A non-filer is withheld double, at Rs 150,000. Your final liability is lower than the withholding at this level. After the flat 20% repairs allowance, net property income is Rs 960,000, on which the tax at normal individual rates is Rs 54,000 — leaving Rs 21,000 refundable if you file a return to claim it.

Is rental tax different for commercial and residential property?

Not under federal income tax. The section 155 withholding slabs and the section 15 treatment are identical whether the property is a house, a flat, a shop or an office. Any calculator showing different federal rates for residential and commercial rent is simply wrong. Three things do differ in practice. Provincial property tax is levied separately on annual rental value and commercial property is generally rated higher. A commercial tenant is far more likely to already be a withholding agent, so deduction at source is routine, whereas many residential landlords never see a deduction and still owe the tax at filing. And commercial lettings more often carry loan interest, insurance and collection costs, which are deductible.

What deductions can I claim against rental income?

Section 15A allows a flat repairs allowance of one-fifth of the rent, regardless of what you actually spent — the single largest deduction most landlords have. On top of that you may deduct provincial property tax paid, insurance premiums on the property, ground rent, interest or profit on a loan taken to acquire or construct it, legal charges, and rent-collection expenditure capped at 4% of the rent. You are taxed on what remains after those deductions, not on gross rent. On Rs 3,000,000 of annual rent the repairs allowance alone brings net property income to Rs 2,400,000 before anything else is claimed.

How much more tax does a non-filer pay on rental income?

Double. Under the Tenth Schedule, the withholding rate for a person not on the Active Taxpayers List is increased by 100%, so every slab of the section 155 table is charged at twice the filer rate. On Rs 1,200,000 of annual rent a filer is withheld Rs 75,000 and a non-filer Rs 150,000. For a company landlord the published rates are 15% for a filer and 30% otherwise. In both cases the extra is pure loss, since getting on the ATL costs nothing beyond filing a return you are already required to file.

Who deducts withholding tax on rent — the tenant or the landlord?

The tenant. Section 155 makes the person paying rent for the use of immovable property the withholding agent: they deduct the tax at the time of payment and deposit it with FBR against the landlord’s CNIC or NTN. The landlord receives rent net of that deduction. The deduction is credited to the landlord and claimed against their liability when filing. If your tenant is not a withholding agent and deducts nothing, the tax has not gone away — it falls due in full on your return, which is the position many residential landlords find themselves in.

Is rental income under Rs 300,000 tax free in Pakistan?

No withholding tax is deducted under section 155 where annual rent does not exceed Rs 300,000 for an individual or AOP, which is Rs 25,000 a month. That is a withholding threshold, not a blanket exemption. The rent still forms part of your total income under section 15. If you have salary or business income as well, the property income stacks on top of it and is taxed at your marginal rate, even though no deduction was made at source.

Rental Income Tax Calculator Pakistan 2026-27

Section 155 Withholding Tax Rates on Rent (2026-27)

Under section 155 of the Income Tax Ordinance 2001, the person paying rent for the use of immovable property deducts tax at source and deposits it against the landlord’s CNIC or NTN. The rates sit in Division V, Part III of the First Schedule. For an individual or AOP landlord they run on four slabs.

Individual and AOP landlords, filer rates. A non-filer is charged double at every slab under the Tenth Schedule.
Annual rent	Rate	Withholding tax
Up to PKR 300,000	0%	Nil
PKR 300,000 to PKR 600,000	5%	5% of the amount exceeding PKR 300,000
PKR 600,000 to PKR 2,000,000	10%	PKR 15,000 + 10% of the amount exceeding PKR 600,000
Above PKR 2,000,000	25%	PKR 155,000 + 25% of the amount exceeding PKR 2,000,000

A company landlord is treated differently: a flat 15% on gross rent for a filer, or 30% otherwise, with no exempt threshold at all.

Withholding at common rent levels

Annual rent up to PKR 300,000 attracts no withholding for an individual or AOP. Being off the Active Taxpayers List doubles the deduction at every level.
Monthly rent	Annual rent	Filer	Non-filer	Filer rate
PKR 25,000	PKR 300,000	PKR 0	PKR 0	0.0%
PKR 50,000	PKR 600,000	PKR 15,000	PKR 30,000	2.5%
PKR 75,000	PKR 900,000	PKR 45,000	PKR 90,000	5.0%
PKR 100,000	PKR 1,200,000	PKR 75,000	PKR 150,000	6.3%
PKR 150,000	PKR 1,800,000	PKR 135,000	PKR 270,000	7.5%
PKR 250,000	PKR 3,000,000	PKR 405,000	PKR 810,000	13.5%
PKR 500,000	PKR 6,000,000	PKR 1,155,000	PKR 2,310,000	19.3%

Commercial vs Residential Property — What Actually Differs

Under federal income tax, nothing. The section 155 withholding slabs and the section 15 treatment are identical whether the property is a house, a flat, a shop or an office. If a calculator shows you different federal rates for residential and commercial rent, it is wrong.

Three things do differ in practice:

Provincial property tax. Levied separately by each province on annual rental value, and commercial property is generally rated higher than residential. It is deductible against your rental income under section 15A(1)(b), but it is not a federal tax and is not computed here.
Who withholds. A commercial tenant is far more likely to be a registered withholding agent, so deduction at source is routine. A private individual renting a house often is not — which is why many residential landlords never see a section 155 deduction, and still owe the tax when they file.
Deduction profile. Commercial lettings more often carry loan interest, insurance and collection costs, all of which section 15A allows.

Deductions Against Rental Income under Section 15A

You are not taxed on gross rent. Section 15A allows a specific list of deductions, and what remains — net property income — is what gets taxed at the normal individual slab rates under section 15.

Repairs allowance — 20% of rent, section 15A(1)(a). A flat one-fifth, allowed regardless of what you actually spent. This is the single largest deduction most landlords have, and it requires no receipts.
Provincial property tax paid — section 15A(1)(b).
Insurance premium on the property — section 15A(1)(d).
Ground rent — section 15A(1)(e).
Interest or profit on a loan taken to acquire, construct or renovate the property — section 15A(1)(f).
Collection expenditure — capped at 4% of rent, section 15A(1)(h). Rent-collection and administration costs.

On PKR 3,000,000 of annual rent, the repairs allowance alone brings net property income down to PKR 2,400,000 before anything else is claimed.

Withholding Tax Is Not Your Final Tax Bill

This is the point most rental calculators miss, and it costs landlords real money. Section 155 withholding is an advance against your liability, computed on gross rent. Your actual liability is computed under section 15 on net property income, after deductions.

Because the withholding ignores your deductions, the two figures rarely match. On PKR 1,200,000 of annual rent, an individual filer is withheld PKR 75,000, but net property income after the repairs allowance is PKR 960,000, on which the tax is only PKR 54,000 — leaving PKR 21,000 refundable. You get it back only if you file a return to claim it.

At higher rents the position reverses: the 25% top withholding slab can fall short of the liability at the normal rates, leaving further tax to pay at filing. The calculator above reports whichever way your own figures fall.

One caveat worth stating plainly: the final-liability figure assumes property is your only source of income. If you also have salary or business income, your property income stacks on top of it and may be taxed at a higher marginal rate than shown.

Rental Income Tax FAQs (Pakistan)

Other tax calculators

Salary tax calculator Business tax calculator Sales tax calculator