If you earn money from renting out residential or commercial property in Pakistan, you're legally required to pay income tax on that rental income. A rental income tax calculator Pakistan tool helps landlords and property owners estimate how much tax they owe, based on the Federal Board of Revenue (FBR) tax slabs for the fiscal year. Understanding this calculation is essential for staying compliant and avoiding penalties.

How Rental Income Tax Is Calculated in Pakistan

Rental income tax in Pakistan is levied under Section 15 of the Income Tax Ordinance, 2001. The calculation varies based on whether you're an individual, association of persons (AOP), or a company.

✅ Step-by-Step Calculation:

1. Determine Gross Rental Income:Total yearly rent received from your property.

2. Deduct 1/5th for Expenses:20% of rental income is deductible as allowance for maintenance and repair.Example: If you earn PKR 1,000,000, your taxable income becomes PKR 800,000.

3. Apply the Relevant Tax Rate Slab:FBR uses slab-based tax rates for individuals and AOPs.

Rental Income Tax Slabs for Individuals & AOPs – 2025

Taxable Rental Income (PKR)Tax RateUp to 300,0000%300,001 – 600,0005% of amount exceeding 300,000600,001 – 2,000,000PKR 15,000 + 10% of amount exceeding 600,0002,000,001 – 4,000,000PKR 155,000 + 15% of amount exceeding 2,000,0004,000,001 – 6,000,000PKR 455,000 + 20% of amount exceeding 4,000,000Over 6,000,000PKR 855,000 + 25% of amount exceeding 6,000,000

Example Calculation

If your annual rental income is PKR 1,500,000:

• Deduct 20% for expenses = PKR 300,000

• Taxable income = PKR 1,200,000

• This falls in the "600,001 – 2,000,000" slab

• Tax = PKR 15,000 + 10% of (1,200,000 – 600,000)

• Final Tax = PKR 15,000 + PKR 60,000 = PKR 75,000

Online Rental Income Tax Calculators

FBR and several tax consultants offer free tools to compute rental tax quickly. These calculators require inputs like:

• Type of property (residential or commercial)

• Location

• Monthly rent

• Duration of tenancy

They auto-apply deductions and tax slabs to estimate your liability.

Tips for Property Owners

• Always declare your rental income in your annual tax return.

• Maintain tenancy agreements and rental receipts as evidence.

• Consult a tax advisor if you have multiple properties or mixed-use units.

• Filing as an FBR filer can reduce withholding tax deductions.

Conclusion

Using a rental income tax calculator in Pakistan can help you stay compliant, budget efficiently, and avoid legal trouble. Whether you’re a first-time landlord or managing multiple properties, understanding how your rental income is taxed is critical to maintaining financial transparency and responsibility.