Rental Income Tax Calculator — Pakistan 2026-27
Tax on rental income in Pakistan for Tax Year 2027 at the section 155 slab rates for individuals (or 15% / 30% for companies), the withholding deducted by a company tenant, allowable repairs and interest, and the balance due or refundable.
| Gross annual rent | — |
|---|---|
| Withholding by the tenant (s.155) | — |
| Allowable deductions | — |
| Taxable income from property | — |
| Tax on property income | — |
| Effective rate on gross rent | — |
| Net rent after tax | — |
| Balance payable / refund with the return | — |
| Deemed income tax (s.7E) | — |
In short
Rental income in Pakistan is taxed as a separate block for individuals at nil up to PKR 300,000 a year, 5% to 600,000, PKR 15,000 + 10% to 2 million and PKR 155,000 + 25% above, with company tenants withholding at the same rates on gross rent; PKR 150,000 a month of rent bears about PKR 135,000 of tax before deductions for repairs (up to 1/5 of rent), interest and property tax. The 7E deemed-income tax was struck down in May 2026.
Who this is for: Landlords with residential or commercial tenants, company tenants working out the withholding, and investors comparing net rental yields.
How rental income is taxed in Pakistan (Tax Year 2027)
Income from property is taxed as a separate block for individuals and AOPs at its own slab rates — nil on the first PKR 300,000 of gross annual rent, 5% to PKR 600,000, PKR 15,000 + 10% to PKR 2 million and PKR 155,000 + 25% above — rather than being added to salary or business income. Companies pay their normal 29% but suffer 15% (ATL) withholding on gross rent.
- Withholding (s.155): company, AOP, government and diplomatic tenants deduct tax from each rent payment at the same slab rates on the gross rent; individual tenants do not. The deduction is adjustable — you reconcile it with the tax on net income in the return.
- Deductions (s.15A): repairs up to one-fifth of rent, insurance, local property taxes, ground rent, interest on money borrowed to buy or build the property, legal and collection charges (up to 6%) and unrecoverable rent.
- Deemed income abolished: the 20% tax on a deemed 5% return from property worth over PKR 25 million (s.7E) was declared unconstitutional by the Federal Constitutional Court on 6 May 2026 and omitted by the Finance Act 2026.
- Advance tax on rent — non-adjustable in practice for non-filers, who also lose the lower 236C/236K rates when they eventually sell.
See also: Capital Gains Tax Calculator — Pakistan (Property & Shares).
Assumptions
- Gross rent = monthly rent × months; deductions = repairs (capped at 1/5 of rent) + interest + property taxes/insurance; taxable = gross − deductions.
- Individuals/AOPs: tax at the s.155 slabs on taxable income; withholding at the same slabs on gross rent when the tenant is a withholding agent. Companies: 15% (ATL) / 30% (non-ATL).
- Balance = tax − withholding (negative = refundable); s.7E deemed income omitted (struck down 6 May 2026).
Worked example
Gross rent PKR 1,800,000. Tenant withholds 15,000 + 10% × 1,200,000 = PKR 135,000 on the gross. Repairs allowed PKR 200,000 (under the PKR 360,000 cap) → taxable PKR 1,600,000 → tax 15,000 + 10% × 1,000,000 = PKR 115,000 (6.4% of gross rent). Net rent after tax PKR 1,485,000 (PKR 123,750 a month). The return shows PKR 20,000 refundable because withholding was on gross rent.
Frequently asked questions
Is rental income taxable in Pakistan?
Yes — gross annual rent above PKR 300,000 is taxed at 5%, 10% and 25% slab rates for individuals (separate from salary and business income), and at 29% for companies after 15% withholding on gross rent.
How much tax on PKR 50,000 rent per month?
PKR 600,000 a year → 5% of the PKR 300,000 above the threshold = PKR 15,000 a year, before any deductions for repairs, interest or property tax.
How much tax on PKR 1 lakh rent per month?
PKR 1,200,000 a year → 15,000 + 10% × 600,000 = PKR 75,000 a year (PKR 6,250 a month), less the tax on any allowed deductions.
Who deducts tax on rent?
Companies, AOPs, government departments, NGOs and diplomatic missions paying rent must withhold under section 155 at the slab rates on the gross rent; a private individual tenant does not withhold.
Can I deduct mortgage interest from rental income?
Yes — profit on a loan taken to buy, build or renovate the rented property is deductible under section 15A, along with repairs (up to 1/5 of rent), insurance and property taxes.
What happened to the 7E deemed income tax?
The Federal Constitutional Court struck down section 7E on 6 May 2026 and the Finance Act 2026 omitted it, so no tax is charged on a deemed 5% return from vacant or self-occupied property for Tax Year 2027.
Is rent from a shop taxed differently from a house?
No — the same s.155 slabs apply to residential and commercial rent for individuals; commercial tenants are more likely to be withholding agents who deduct tax at source.
Is rental income added to salary for tax?
No — for individuals income from property is taxed as a separate block at its own rates and is not aggregated with salary or business income.
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