New withholding tax card sets rental income rates for individuals, AOPs and companies
ISLAMABAD: The Federal Board of Revenue (FBR) has notified the withholding tax rates applicable to rental income from immovable property for Tax Year 2027, setting out different rates for individuals, associations of persons (AOPs) and companies.
The tax card has been issued under Section 155 of the Income Tax Ordinance, 2001, as updated up to June 30, 2026. It provides taxpayers and withholding agents with the applicable rates for rental income during Tax Year 2027.
Rental income tax rates for individuals and AOPs
For individuals and AOPs, no withholding tax will be deducted where gross annual rental income does not exceed Rs300,000.
Where annual rental income exceeds Rs300,000 but does not exceed Rs600,000, withholding tax will be charged at 5% of the amount exceeding Rs300,000.
For rental income exceeding Rs600,000 but not exceeding Rs2 million, the applicable tax will be Rs15,000 plus 10% of the amount exceeding Rs600,000.
For annual rental income exceeding Rs2 million, the tax will be Rs155,000 plus 25% of the amount exceeding Rs2 million.
Companies face separate tax rates
The FBR has prescribed separate withholding tax rates for companies earning rental income.
Companies appearing on the Active Taxpayers List (ATL) will be subject to a withholding tax rate of 15% on rental income.
The rate rises to 30% for companies that are not included on the ATL.
Tax rates notified under Income Tax Ordinance
The latest rates have been notified with reference to Division-V of Part-III of the First Schedule to the Income Tax Ordinance, 2001, read with Rule 1 of the Tenth Schedule.
The tax card provides clarity to property owners, companies, tenants and withholding agents regarding the applicable withholding obligations on rental income for Tax Year 2027.
The FBR said the notification is intended to facilitate compliance with income tax requirements and ensure that withholding agents apply the prescribed rates when making rental payments.
The revised tax card will serve as the applicable reference for withholding tax on rental income from immovable property during Tax Year 2027.