If you own a rental property in Pakistan and want a simple, clear answer to how much tax you owe in 2026-27 — this is the guide you need.
No lengthy legal language. Just the current slabs, how to calculate your liability, and worked examples you can apply directly to your own situation.
The direct answer: Pakistan taxes rental income on a progressive slab basis. Income up to PKR 300,000 annually is completely exempt. Above that, rates rise from 5% to 25% depending on your net annual rental income. The critical word is net — you deduct 20% from your gross rent before applying any slab rate.
The Current Rental Income Tax Slabs for 2026-27
These are the rates that apply to the tax year running July 1 2025 to June 30 2026, filed by September 30 2026.
| Annual Net Rental Income | Tax Calculation |
|---|---|
| Up to PKR 300,000 | Exempt — zero tax |
| PKR 300,001 to PKR 600,000 | 5% of amount above PKR 300,000 |
| PKR 600,001 to PKR 2,000,000 | PKR 15,000 + 10% of amount above PKR 600,000 |
| PKR 2,000,001 to PKR 4,000,000 | PKR 155,000 + 15% of amount above PKR 2,000,000 |
| PKR 4,000,001 to PKR 6,000,000 | PKR 455,000 + 20% of amount above PKR 4,000,000 |
| Above PKR 6,000,000 | PKR 855,000 + 25% of amount above PKR 6,000,000 |
The Step You Must Do Before Applying Any Slab
This is where most Pakistani landlords make an expensive mistake. They apply the slab rates to their gross rent — the full amount they collect from tenants. That is wrong and it means overpaying tax.
Before applying any slab you must deduct the 20% standard repair and maintenance allowance from your gross annual rent. This deduction is automatic — you do not need receipts or documentation. It is yours by right under FBR’s rental income tax rules.
Additionally you can deduct on top of the 20%:
- Property insurance premiums paid during the year
- Ground rent or local property taxes paid to authorities
- Bank loan markup on financing used to buy the rental property
- Professional property management fees
Your taxable rental income is what remains after all these deductions — not your gross rent.
Three Worked Examples
Example 1 — Small Rental Property
Monthly rent: PKR 55,000
Gross annual rent: PKR 660,000
Less 20% standard deduction: PKR 132,000
Net taxable income: PKR 528,000
This falls in the PKR 300,001 to PKR 600,000 slab.
Tax = 5% of (PKR 528,000 − PKR 300,000) = 5% × PKR 228,000 = PKR 11,400 for the year
Example 2 — Mid-Range Bahria Town Property
Monthly rent: PKR 130,000
Gross annual rent: PKR 1,560,000
Less 20% standard deduction: PKR 312,000
Net taxable income: PKR 1,248,000
This falls in the PKR 600,001 to PKR 2,000,000 slab.
Tax = PKR 15,000 + 10% of (PKR 1,248,000 − PKR 600,000) = PKR 15,000 + PKR 64,800 = PKR 79,800 for the year
Example 3 — Premium Property or Airbnb Host
Monthly net Airbnb revenue: PKR 250,000
Gross annual income: PKR 3,000,000
Less 20% standard deduction: PKR 600,000
Net taxable income: PKR 2,400,000
This falls in the PKR 2,000,001 to PKR 4,000,000 slab.
Tax = PKR 155,000 + 15% of (PKR 2,400,000 − PKR 2,000,000) = PKR 155,000 + PKR 60,000 = PKR 215,000 for the year
What Is Withheld Tax and How Does It Affect You
If your tenant is a company or registered business rather than an individual they are legally required to deduct 15% withholding tax from your rent before paying you and deposit it with FBR on your behalf.
This withholding is not an additional tax on top of the slab calculation. It is an advance payment that is credited against your final annual liability when you file your return. If the amount already withheld is more than your calculated slab liability you receive the difference back as a credit.
If your tenant is an individual there is no withholding — you are responsible for the full payment when you file.
Which Slab Will Most Islamabad Landlords Fall Into
Based on current rental prices across Islamabad’s key markets in 2026-27 here is where most landlords will find themselves.
A landlord earning PKR 60,000 to PKR 100,000 per month in rent — a 5 Marla to 7 Marla house in Bahria Town or a mid-range CDA sector property — will typically fall into the 10% slab after the standard deduction. Annual tax liability will generally run between PKR 50,000 and PKR 100,000.
A landlord earning PKR 120,000 to PKR 180,000 per month — a 10 Marla house in Bahria Town Phase 4 or Phase 7 — will fall in the upper part of the 10% slab or enter the 15% slab depending on income. Annual tax liability will typically run PKR 100,000 to PKR 200,000.
A professionally managed Airbnb property generating PKR 200,000 to PKR 320,000 per month gross will fall firmly in the 15% slab. Annual tax liability after the standard deduction typically runs PKR 180,000 to PKR 320,000 depending on exact revenue.
The Filing Deadline You Cannot Miss
The annual income tax return covering rental income earned July 2025 to June 2026 must be filed through FBR’s Iris portal by September 30, 2026.
Missing this deadline triggers a default surcharge of 12% per annum on any unpaid tax — roughly 1% additional cost for every month of delay. You also lose your active filer status which increases withholding tax rates on your banking transactions, property purchases, and vehicle registrations.
Filing on time is genuinely the lowest-cost option regardless of how much or how little you owe.
The One Thing That Makes This Calculation Easy Every Year
Every landlord who goes through this calculation annually needs one thing above everything else — accurate, organised records of what their property earned and what it cost to maintain during the year.
Landlords whose properties are professionally managed receive monthly financial statements showing exactly this — gross rent collected, maintenance costs, management fees, and net income. At filing time the annual figure is simply the sum of twelve monthly statements. No scrambling through old bank records. No trying to remember what repairs cost in October. Just a clean, accurate number ready to enter in Iris.
T2R provides every managed property owner with monthly financial reporting as standard — making the annual September 30 filing deadline a routine task rather than a stressful exercise.
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Clear records. Right slabs. Zero surprises. That is T2R.
Reference Articles:
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- Pakistan Budget 2026-27: Big Relief for Landlords & Rental Income Tax – What It Means for Islamabad Investors
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- Pakistan Budget 2026-27: What Every Property Owner, Landlord and Tenant Needs to Know
- Tax on Rental Income in Pakistan 2026: What Every Landlord Needs to Know
- Property Tax in Pakistan 2026: Complete Guide for Homeowners and Landlords
- Withholding Tax on Property Purchase in Pakistan 2026: What Every Buyer and Seller Needs to Know
- Capital Gains Tax on Property in Pakistan 2026: What Every Seller Needs to Know
- Best Areas to Live in Islamabad 2026: Complete Neighbourhood Guide
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- Best Holiday Homes in Murree 2026: Top Areas, Prices and What to Expect
- Pakistan’s Record Remittances in FY2026: What It Means for Property Investors
- LDA Cracks Down on Illegal Housing Schemes in 2026: What Every Property Buyer Must Know
- Smart Cities in Pakistan 2026: Investment Opportunities for Property Buyers and Investors
- FBR Sells Bahria Town’s Entire Murree Property in 2026: What Every Property Investor Needs to Know
