Is the rent from my house in Pakistan taxable if I live abroad, and what should my tenant deduct?

Many overseas Pakistanis keep the family house and let it out. The rent is taxable in Pakistan, and the practical question is what the tenant should take off before paying. Two withholding sections in the Income Tax Ordinance, 2001 can apply to the same rent, and the law does not say which one wins. This page follows the Ordinance as amended to 30 June 2026, with rates for tax year 2027 (1 July 2026 to 30 June 2027).

Is the rent taxable in Pakistan?

Yes. Section 101(9) says rental income is Pakistan-source income if it is derived from “the lease of immovable property in Pakistan whether improved or not”, or from any other interest in or over immovable property. The test is where the property is. A landlord living in Toronto is taxable in Pakistan on rent from a house in Islamabad in the same way as a landlord living next door. The rent is taxed under the head Income from Property.

Which deductions can the tenant be required to make?

Section 155 (rent withholding). A “prescribed person” paying rent to any person deducts tax from the gross rent at the Division V rates. Prescribed persons are listed in section 155(3): the Federal and Provincial Governments, Local Government, companies, non-profit organisations and charitable institutions, diplomatic missions, private schools, boutiques, beauty parlours, hospitals, clinics and maternity homes, individuals or associations of persons paying gross rent of Rs. 1.5 million or more in a year, and anyone the Board notifies. For an individual landlord, Division V sets:

Gross rent for the year	Deduction
Up to Rs. 300,000	Nil
Rs. 300,001 to Rs. 600,000	5% of the amount above Rs. 300,000
Rs. 600,001 to Rs. 2,000,000	Rs. 15,000 + 10% of the amount above Rs. 600,000
Above Rs. 2,000,000	Rs. 155,000 + 25% of the amount above Rs. 2,000,000

Rule 1 of the Tenth Schedule increases the rate by one hundred percent where the landlord is not on the active taxpayers’ list.

Section 152(2) (payments to non-residents). “Every person paying an amount to a non-resident person” deducts tax from the gross amount at the rate in Division II of Part III, which paragraph (2) sets at 20% of the gross amount paid. This is not limited to prescribed persons. Rule 10(b) of the Tenth Schedule says the Tenth Schedule does not apply to section 152 deductions other than those under section 152(2A), so the 20% is not doubled for a landlord off the list.

Which one takes priority?

The Ordinance does not say. Section 152(3)(a) lists deductions that take a payment out of section 152(2), such as tax deducted from salary. Section 155 used to be on that list, but the Finance Act, 2013 omitted it. Section 155(1) has its own explanation that it applies to rent “irrespective of head of income”. Nothing in either section says how a tenant should proceed when both apply to the same payment to a non-resident landlord. This page does not resolve that.

Can a representative in Pakistan change the position?

Section 172(3) says the representative of a non-resident includes any person in Pakistan “from or through whom the non-resident person is in receipt of any income, whether directly or indirectly”, or who holds or controls money belonging to the non-resident. Section 152(3)(c) takes a payment out of section 152(2) where it is payable by a person liable to pay tax on it as the non-resident’s representative under section 172(3). Section 152(4) says a person claiming to be a representative must file a declaration with the Commissioner before making any payment.

Separately, section 152(3)(d) excludes a payment where the non-resident is not chargeable to tax on the amount, and section 152(5) requires a payer who intends to pay without deduction to notify the Commissioner first.

Worked example (illustrative figures)

Tahir lives in Toronto and is non-resident for tax year 2027. He lets his house in F-10, Islamabad to a private company for Rs. 250,000 a month, Rs. 3,000,000 for the year.

Reading 1: section 155.

1. Band: above Rs. 2,000,000.
2. Deduction: Rs. 155,000 + 25% x (Rs. 3,000,000 - Rs. 2,000,000) = Rs. 155,000 + Rs. 250,000 = Rs. 405,000.
3. If Tahir is not on the active taxpayers’ list, rule 1 doubles it: Rs. 810,000.

Reading 2: section 152(2).

1. Deduction: Rs. 3,000,000 x 20% = Rs. 600,000, whether or not he is on the list.

If his cousin in Rawalpindi collects the rent and has filed a declaration as his representative under section 152(4), section 152(3)(c) takes the payment out of section 152(2). Section 155 is not switched off by that provision.

What if my tenant is a family, not a company?

A family paying Rs. 100,000 a month pays Rs. 1,200,000 a year. That is below the Rs. 1.5 million line in section 155(3)(vib), so the family is not a prescribed person under that sub-clause. Section 152(2), however, is written for “every person” paying a non-resident. On its text, 20% of Rs. 1,200,000, which is Rs. 240,000, would apply unless an exclusion in section 152(3) fits.

Common mistakes

• Assuming rent is foreign income because the landlord lives abroad. Section 101(9) ties the source to the property.
• Assuming only section 155 matters. Section 152(2) also reaches payments to non-residents, and section 155 is no longer excluded from it.
• Assuming a relative collecting the rent is automatically a representative for section 152(3)(c). Section 152(4) requires a declaration before payment.

What to check in the official text

Read section 101(9), section 155(1) and (3), section 152(2), (3), (4) and (5), section 172(3), paragraph (2) of Division II and Division V of Part III of the First Schedule, and rules 1 and 10 of the Tenth Schedule. Whether the tax deducted settles the landlord’s liability, and how it is credited in a return, depends on the landlord’s overall position. Board notifications adding prescribed persons under section 155(3)(vii), treaty rates, and provincial property tax are outside this corpus.