Rental Income Tax Rates in Pakistan for Tax Year 2024
Income generated from renting out properties, such as land or buildings, is subject to taxation by the guidelines outlined in sections 15 and 16 of the Income Tax Ordinance 2001. The rental income tax rates for income during the fiscal year 2023-24 are specified in the First Schedule of the ITO 2001.
For calculating the taxable rental income during a tax year, certain deductions are allowed from rental income received. For details click on the following link:-
Computation of Rental Income in Pakistan
Rental Income Tax Rates in Pakistan for the Year 2023-24
The tax slab rates for rental income are given in Division VIA of Part I of the First Schedule to the Income Tax Ordinance 2001. The slab rates for the tax year 2024 are tabulated below:-
| Income From | Income To | Rate of Tax |
|---|---|---|
| 0 | 300,000 | Nil |
| 300,001 | 600,000 | 5% of the amount exceeding Rs.300,000 |
| 600,001 | 2,000,000 | 15,000 plus 10% of amount exceeding Rs.600,000 |
| Above Rs.2,000,000 | 155,000 plus 25% of the amount exceeding Rs.2,000,000 |
Rental income up to Rs.300,000/- in a tax year is exempt from tax. For income between Rs. 300,000/- and Rs. 600,000/- the tax rate will be 5% of the amount of income that is more than Rs. 300,000/-.
If the rental income exceeds Rs. 600,000/- and is up to Rs.2,000,000/- the tax rate is 10% of the amount of rental income that is more than Rs. 600,000/- plus Rs.15,000/-.
If the income from rent exceeds Rs.2,000,000/- the tax rate will be 25% on the amount of income exceeding Rs.2,000,000/- plus Rs.155,000/-.
Deduction of tax on source
Every prescribed person is required to deduct withholding tax on prescribed tax rates from the amount of rent being paid during a tax year by section 155 of the Income Tax Ordinance 2001. The following are the prescribed persons for this purpose as described in the Ordinance:-
- The Federal Government
- Provincial Governments
- Local Government
- Company
- Non-profit organizations including charitable institutions.
- Diplomatic missions of some foreign country or state
- Private educational institutions
- Boutique
- Beauty parlour
- Hospitals
- Clinics or maternity homes
- Individuals or Associations of Persons that are paying annual gross rent of rupees one and a half million or above.
- Any other person as notified by the Federal Board of Revenue (FBR) for this purpose.
Disclaimer
“The contents of this post are intended for informational and educational purposes only and are based on data gathered by Team Fiscal Updates. It is important to note that the information provided here should not be relied upon as a reference for any legal documents. If assistance is required with legal decisions, seeking professional advice is recommended. It may also be noted that the provisions of the Income Tax Ordinance 2001 have an overriding effect on all other laws of the country and shall prevail in case of any contradiction in terms of Section 3 of the Ordinance”
Related Posts
Tax Rates Rental Income for Tax Year 2023
Sir the rate mentioned above for tax deduction at source from rental payment rather than tax on rental income. Please clarify my understanding.
Hello
Thanks for your comment
Income tax is the liability of the person receiving the rental income i.e. the owner of the rented property. However, the prescribed persons are required to with hold tax from the payments made to the owner of property. The final impact of tax will fall on the owner of the property.
Is there any other tax on property like office building, other than it’s rented income received to the owner?
In addition to income tax on rental income of property, property tax is also levied which is governed by the Urban Immovable Property Tax Acts of the respective provinces of Pakistan.
If inherited property is on 4 person’s name, and property rent is 375k per month, what slab will be used for that rent. That will be considered one party because all 4 person’s are mutual owner, and no one knows which SQ ft belongs to which owner. Please explain. Thanks
The taxability of all joint owners will be according to their share of ownership.