Rent up to Rs 300,000 a year is tax free for an individual or AOP. Above that, tax is 5% of the next Rs 300,000, then 10% up to Rs 2 million, then 25% on the rest. So Rs 100,000 a month (Rs 1,200,000 a year) pays Rs 75,000 for the year.
The calculator applies these slabs to your share of the yearly rent. It also shows what a company, bank, school or other prescribed tenant should cut from each payment, and how that doubles if you are not on the Active Taxpayers List.
Rental income tax slabs 2026-27
These rates apply to gross rent for tax year 2027, which runs from 1 July 2026 to 30 June 2027. Finance Act 2026 did not change them, so 2025-26 used the same table.
| Yearly rent | Tax (and withholding if on ATL) | Withholding if not on ATL |
|---|---|---|
| Rs 0 to Rs 300,000 | Nil | Nil |
| Rs 300,001 to Rs 600,000 | 5% of rent above Rs 300,000 | 10% of rent above Rs 300,000 |
| Rs 600,001 to Rs 2,000,000 | Rs 15,000 + 10% of rent above Rs 600,000 | Rs 30,000 + 20% of rent above Rs 600,000 |
| Above Rs 2,000,000 | Rs 155,000 + 25% of rent above Rs 2,000,000 | Rs 310,000 + 50% of rent above Rs 2,000,000 |
| Company, any amount | 15% of gross rent | 30% of gross rent |
The first column is both the tax you owe for the year and the amount a prescribed tenant deducts if you are on the ATL. The non-ATL column is only the deduction at source. It comes from Rule 1 of the Tenth Schedule, which raises withholding by 100% for anyone not on the ATL.
How to calculate tax on rental income in Pakistan
- Add up the rent for the tax year. Monthly rent × 12, for the months the property was let during the year.
- Take your share. Joint owners with fixed shares are each taxed on their own share. Two brothers owning a house half each and letting it for Rs 150,000 a month each have Rs 900,000 a year.
- Add one tenth of any non-adjustable advance. Money you keep for good, often called pagri, is spread over ten years under section 16. A refundable security deposit is not rent.
- Apply the slab. Find the band your total falls in and use the formula in the table above.
- Take off what your tenant deducted. The balance, if any, is paid with your return.
Worked example
A shop is let to a company for Rs 150,000 a month. The owner is on the ATL.
- Yearly rent: 150,000 × 12 = Rs 1,800,000
- Slab: Rs 600,001 to Rs 2,000,000, so Rs 15,000 + 10% of the amount above Rs 600,000
- 10% of Rs 1,200,000 = Rs 120,000
- Tax: 15,000 + 120,000 = Rs 135,000 for the year, or Rs 11,250 a month
The company deducts Rs 11,250 from each month's rent. That covers the full tax, so nothing more is due with the return. If the owner were not on the ATL, the company would deduct Rs 22,500 a month instead (Rs 270,000 a year).
Tax on common monthly rents
For one owner with no advance, 2026-27 rates.
| Monthly rent | Yearly rent | Tax for the year | Deducted per month (ATL) | Deducted per month (not on ATL) |
|---|---|---|---|---|
| Rs 25,000 | Rs 300,000 | Rs 0 | Rs 0 | Rs 0 |
| Rs 50,000 | Rs 600,000 | Rs 15,000 | Rs 1,250 | Rs 2,500 |
| Rs 75,000 | Rs 900,000 | Rs 45,000 | Rs 3,750 | Rs 7,500 |
| Rs 100,000 | Rs 1,200,000 | Rs 75,000 | Rs 6,250 | Rs 12,500 |
| Rs 150,000 | Rs 1,800,000 | Rs 135,000 | Rs 11,250 | Rs 22,500 |
| Rs 200,000 | Rs 2,400,000 | Rs 255,000 | Rs 21,250 | Rs 42,500 |
| Rs 300,000 | Rs 3,600,000 | Rs 555,000 | Rs 46,250 | Rs 92,500 |
| Rs 500,000 | Rs 6,000,000 | Rs 1,155,000 | Rs 96,250 | Rs 192,500 |
Who must deduct tax from rent (section 155)
Only a prescribed person has to cut tax from rent. Under section 155 that means:
- the federal government, a provincial government or a local government
- a company
- a non-profit organisation or charitable institution
- a diplomatic mission of a foreign state
- a private school or other educational institution, a hospital, clinic or maternity home, a beauty parlour or a boutique
- an individual or AOP paying gross rent of Rs 1.5 million or more in a tax year
- anyone else the FBR notifies
If your tenant is a family paying Rs 80,000 a month, nobody deducts anything. You still owe the tax. Pick "Tenant does not" in the calculator and it shows the full amount as payable with your return.
The tenant deposits the tax with the FBR and should give you a certificate. Keep it. The deduction is adjustable, which means it counts against the tax on your return, and any excess can be claimed back.
Companies and other points
Property owned by a company
A prescribed tenant deducts a flat 15% of gross rent from a company on the ATL, and 30% if the company is not on it. There is no tax-free amount. The company's final tax on the rent is worked out in its own return at its normal rate, 29% for most companies in 2026-27, after allowable expenses.
Can individuals claim expenses?
The slabs above apply to gross rent. FBR Circular 3 of 2020 explains that since Finance Act 2020 an individual or AOP may instead opt for normal slab rates on net rent after the section 15A deductions, such as repairs, property tax, insurance and loan interest. That route only helps when expenses are large, so ask a tax adviser before you choose it.
Deemed income on empty property ends
Finance Act 2026 omitted section 7E. From tax year 2027, a second house that is not let out no longer creates deemed income. FBR confirmed this in Circular No. 2 of 2026-27.
This calculator follows the rates in the Income Tax Ordinance as amended by Finance Act 2026. It does not cover the capital gains tax when you sell property, which has its own rates. Your return and FBR records are the final word.
Rental income tax questions
How much tax is due on Rs 50,000 monthly rent?
Rs 15,000 for the year, or Rs 1,250 a month, if you own the property alone. Rs 50,000 a month is Rs 600,000 a year. The first Rs 300,000 is tax free and the next Rs 300,000 is taxed at 5%. A prescribed tenant would deduct Rs 1,250 a month if you are on the ATL and Rs 2,500 if you are not.
Is rent up to Rs 300,000 a year tax free?
Yes, for an individual or an AOP. Rent up to Rs 300,000 a year, which is Rs 25,000 a month, carries no tax in 2026-27. You should still declare it in your return. A company gets no such limit: a prescribed tenant deducts 15% from the first rupee.
What is the rental income tax rate for non-filers?
The tax you owe is the same slab, but your tenant deducts double. On Rs 1,800,000 a year, an ATL owner has Rs 135,000 deducted and a non-ATL owner Rs 270,000. The extra is advance tax. File your return to get on the ATL and adjust or reclaim it.
How is rent taxed when a house has two or more owners?
Each owner with a fixed share is taxed on that share of the rent, using the slabs separately. Two equal owners of a house let for Rs 150,000 a month each have Rs 900,000 a year, so each owes Rs 45,000. Enter your percentage in the share box to see your figure.
Did the budget 2026-27 change tax on rental income?
No. Finance Act 2026 kept the slabs for individuals and AOPs and the 15% company rate. The change for property owners was the removal of section 7E, the tax on deemed income from extra property you do not let out.
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Last reviewed 29 September 2026. Results are estimates; official notices always take precedence.