Islamabad, August 23, 2025 – The Federal Board of Revenue (FBR) has officially released the new withholding tax rates on rental income from immovable properties for the tax year 2025–26.
These rates, notified under Section 155 of the Income Tax Ordinance, 2001, apply to individuals, associations of persons (AOPs), and companies earning rental income from properties across Pakistan.
Key Guidelines for Withholding Tax
According to FBR, every “prescribed person” making payments on account of rent – whether full, partial, or advance – is required to deduct withholding tax from the gross rent amount. The term “gross amount of rent” also includes payments for furniture, fixtures, or services related to the property.
Prescribed Persons Responsible for Deduction
The law outlines the following as “prescribed persons” who must deduct tax at the source:
Federal, Provincial, and Local Governments
Companies and non-profit organizations
Charitable institutions and foreign diplomatic missions
Private educational institutions, boutiques, beauty parlours, hospitals, clinics, and maternity homes
Individuals or AOPs paying gross rent of Rs. 1.5 million or more annually
Any other person notified by FBR
Differential Rates for ATL and Non-ATL Taxpayers
The FBR has specified separate rates for taxpayers appearing on the Active Taxpayers List (ATL) and for those who are not. Higher rates apply to non-ATL taxpayers as a penalty for non-compliance.
Table of Withholding Tax Rates – Rental Income (2025–26)
| Section | Taxpayer | Description | ATL Rate | Non-ATL Rate |
| 155 – Rent of Immovable Property | Individual / AOP | Where gross rent does not exceed Rs. 300,000 | Nil | – |
| 155 – Rent of Immovable Property | Individual / AOP | Where gross rent exceeds Rs. 300,000 but does not exceed Rs. 600,000 | 5% of amount exceeding Rs. 300,000 | – |
| 155 – Rent of Immovable Property | Individual / AOP | Where gross rent exceeds Rs. 600,000 but does not exceed Rs. 2,000,000 | Rs. 15,000 + 10% of amount exceeding Rs. 600,000 | – |
| 155 – Rent of Immovable Property | Individual / AOP | Where gross rent exceeds Rs. 2,000,000 | Rs. 155,000 + 25% of amount exceeding Rs. 2,000,000 | – |
| 155 – Rent of Immovable Property | Company | Flat Rate | 15% | 30% |
Purpose of the Notification
The FBR stated that these revised rates aim to ensure proper documentation of rental income, improve revenue collection, and encourage property owners to register on the ATL to benefit from lower tax deductions.