Withholding Tax on Rental Income in Pakistan (2026-27)
If you pay or receive rent in Pakistan, withholding tax (WHT) on rental income probably applies to you. It is governed by Section 155 of the Income Tax Ordinance, 2001. The rate depends on who is receiving the rent and, for companies, on whether they are on FBR's Active Taxpayers' List (ATL).
How Section 155 Works
When a person required to withhold tax pays rent for immovable property, they deduct tax at source and deposit it with FBR. The landlord receives the net amount and can claim credit for the tax deducted when filing their return.
Rates for Individuals and AOPs
For individuals and Associations of Persons (AOPs), tax is charged on progressive slabs of annual rent:
| Annual rent (Rs.) | Tax |
|---|---|
| Up to 300,000 | Nil |
| 300,001 to 600,000 | 5% of the amount over 300,000 |
| 600,001 to 2,000,000 | Rs. 15,000 + 10% of the amount over 600,000 |
| Above 2,000,000 | Rs. 155,000 + 25% of the amount over 2,000,000 |
Rates for Companies
When the landlord is a company, a flat rate applies: 15% for ATL and 30% for non-ATL.
Worked Examples
Rs. 25,000 per month (individual landlord). Annual rent is Rs. 300,000, so the tax is nil.
Rs. 50,000 per month. Annual rent is Rs. 600,000. Tax = 5% of (600,000 − 300,000) = Rs. 15,000 for the year.
Rs. 100,000 per month. Annual rent is Rs. 1,200,000. Tax = 15,000 + 10% of (1,200,000 − 600,000) = Rs. 75,000 for the year.
Rs. 250,000 per month. Annual rent is Rs. 3,000,000. Tax = 155,000 + 25% of (3,000,000 − 2,000,000) = Rs. 405,000 for the year.
Rs. 100,000 per month to a company landlord. An ATL company is taxed at 15%, which is Rs. 15,000 per month. A non-ATL company is taxed at 30%, which is Rs. 30,000 per month.
Common Mistakes
- Using monthly rent in the slab. The slabs apply to annual rent. Multiply monthly rent by 12 first.
- Ignoring the landlord's status. Individuals and companies are treated differently.
- Not issuing a withholding certificate. The landlord needs proof of deduction to claim credit in their return.
- Late deposit. Tax deducted must be deposited with FBR on time, and withholding statements must be filed.
Skip the manual math. Use our free Withholding Tax Calculator: select "Rent of Immovable Property", enter the annual rent, and get the tax in seconds.
Open the WHT CalculatorFrequently Asked Questions
What is the withholding tax rate on rent in Pakistan?
For individuals and AOPs, it is slab-based, from nil up to Rs. 300,000 annual rent to 25% on rent above Rs. 2,000,000. For companies, it is a flat 15% (ATL) or 30% (non-ATL).
Is tax on rent calculated on monthly or annual rent?
Annual rent. Multiply the monthly rent by 12 before applying the slab.
Who deducts the withholding tax, the tenant or the landlord?
The person paying the rent deducts it before payment and deposits it with FBR. The landlord then claims credit for it in their return.
Do I still need to file a return if tax was deducted?
Yes. Tax deducted at source is credited against your liability, but rental income must still be reported in your income tax return.
Need help with rental income tax? Contact Taxfiner and we'll confirm the correct treatment and prepare your return. You may also like our guide on filing your income tax return.