Individuals can claim a tax credit on qualifying housing-loan interest for eligible personal houses and flats under Section 63A.
ISLAMABAD, September 17, 2026: The Federal Board of Revenue (FBR) has retained a tax credit for individuals on qualifying interest and other specified payments made on low-cost housing loans during Tax Year 2027.
The provision is contained in Section 63A of the Income Tax Ordinance, 2001, updated by the FBR up to June 30, 2026.
Under the provision, an individual may claim a tax credit for profit on debt, share in rent or share in the appreciation in the value of a house paid during the tax year, where the qualifying loan is used for the construction or acquisition of a personal house or flat.
Loans eligible for housing tax credit
The qualifying loan must have been obtained from a scheduled bank or another financial institution regulated by the Securities and Exchange Commission of Pakistan (SECP).
Section 63A also covers loans advanced by the government, local government, a statutory body or a public company listed on a registered stock exchange in Pakistan.
The loan must be used to construct or acquire a qualifying personal residence.
For a house, the land area must not exceed 2,500 square feet, while a qualifying flat must have a total area of no more than 2,000 square feet.
How the housing tax credit is calculated
The tax credit under Section 63A is calculated using the following formula:
(A/B) × C
Under the formula:
• A is the tax assessed on the individual for the relevant tax year before allowing any tax credit under the applicable provisions of the Income Tax Ordinance.
• B is the individual’s taxable income for the relevant tax year.
• C is the lesser of the total qualifying profit on debt paid during the year or 30 per cent of taxable income for that tax year.
This means the amount of housing-loan interest taken into account for the tax credit is subject to a statutory limit.
Restrictions on claiming the tax credit
Section 63A places additional restrictions on taxpayers seeking to claim the housing-loan tax credit.
An individual cannot claim the credit for any profit that is deductible under Section 15A of the Income Tax Ordinance, 2001.
The provision also limits the frequency with which the tax credit can be claimed. An individual who has claimed a tax credit under Section 63A cannot claim another tax credit under the same section for another house or flat during the subsequent 15 tax years.
The rules therefore link the tax credit to a qualifying personal residence while imposing limits on the property’s size, the amount of qualifying loan-related payments and the frequency of claiming the benefit.