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Withholding (Income) Tax (WHT) on Rental Income (2025–26) in Pakistan

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Withholding Tax (WHT) on Rental Income from Immovable Property in Pakistan

Withholding tax (WHT) on rental income from immovable property in Pakistan is governed by Section 155 of the Income Tax Ordinance, 2001. The applicable rates depend on whether the landlord is an individual, an Association of Persons (AOP), or a company, and their status on the Active Taxpayers’ List (ATL).

Office setup with documents and laptop showing WHT rates on rental income under Section 155

WHT Rates for Individuals and AOPs (Tax Year 2025–26)

Withholding tax for individuals and AOPs is tiered based on the annual gross rent. For non-ATL taxpayers, the rates are significantly higher, effectively double those for ATL taxpayers.

Gross Annual Rent

Rate for Active Taxpayers

Rate for Non-Active Taxpayers

Up to PKR 300,000

Nil

Nil

PKR 300,001 to PKR 600,000

5% of the amount exceeding PKR 300,000

10% of the amount exceeding PKR 300,000

PKR 600,001 to PKR 2,000,000

PKR 15,000 + 10% of the amount exceeding PKR 600,000

PKR 30,000 + 20% of the amount exceeding PKR 600,000

Exceeding PKR 2,000,000

PKR 155,000 + 25% of the amount exceeding PKR 2,000,000

PKR 310,000 + 50% of the amount exceeding PKR 2,000,000

WHT Rates for Companies

For companies, the withholding tax on rental income is charged at a flat rate.

Taxpayer Type

Rate for Active Taxpayers

Rate for Non-Active Taxpayers

Company

15%

30%

Who Withholds the Tax?

The tenant (the person or company paying the rent) is responsible for deducting the WHT at the time of payment and depositing it with the FBR. The deducted amount is considered an advance tax payment on behalf of the landlord.

How to Check the Active Taxpayers’ List (ATL) Status

To check if you are on the ATL and avoid higher tax rates, you can visit the FBR’s website and use the ATL search facility.

How to deposit the withholding tax

The withholding agent (the tenant) can pay the tax online through the FBR’s e-payment system. A Payment Slip for Income Tax (PSID) is generated and can be paid through a designated bank.

To calculate the monthly Withholding Tax (WHT) on a rental income of PKR 800,000, you must first determine the annual income and then apply the correct tax slab rate based on the landlord’s Active Taxpayers’ List (ATL) status. There is no “tax-free allowance” deducted from gross rental income; only a repair allowance is deductible before final tax liability is computed.

Professional tax consultants explaining Withholding Tax on rental income in Pakistan 2025–26.
Client meeting with income tax lawyer in Lahore for rental income tax filing

Annual rental income

  • Monthly rent: PKR 800,000
  • Annual rent: PKR 800,000 x 12 = PKR 9,600,000

Calculation for an Active Taxpayer (Individual/AOP)

Assuming the landlord is on the Active Taxpayers’ List, you can use the FBR rates for the 2025–26 Tax Year.

  1. Find the applicable tax slab: The annual rent of PKR 9,600,000 falls into the highest bracket: “Gross rent exceeding PKR 2,000,000”.
  1. Apply the tax formula for Active Taxpayers:
    1. Formula: PKR 155,000 + 25% of the amount exceeding PKR 2,000,000.
    2. Calculation:
  • PKR 9,600,000 – PKR 2,000,000 = PKR 7,600,000 (amount exceeding)
  • 25% of PKR 7,600,000 = PKR 1,900,000
  • PKR 155,000 + PKR 1,900,000 = PKR 2,055,000 (Annual WHT)
  1. Monthly WHT:
    1. PKR 2,055,000 / 12 = PKR 171,250 (Monthly WHT)

Calculation for a Non-Active Taxpayer (Individual/AOP)

For non-ATL taxpayers, the rates are doubled.

  1. Apply the tax formula for Non-Active Taxpayers:
    1. Formula: PKR 310,000 + 50% of the amount exceeding PKR 2,000,000.
    2. Calculation:
  • PKR 9,600,000 – PKR 2,000,000 = PKR 7,600,000 (amount exceeding)
  • 50% of PKR 7,600,000 = PKR 3,800,000
  • PKR 310,000 + PKR 3,800,000 = PKR 4,110,000 (Annual WHT)
  1. Monthly WHT:
    1. PKR 4,110,000 / 12 = PKR 342,500 (Monthly WHT)