Effective Tax Rate on Rental Income
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Global Property Guide research
Nonresident individuals are taxed only on their Pakistani-sourced income. Married couples are taxed separately, joint taxation is not allowed in Pakistan.
The tax year is the 12-month period ending on 30 June and is denoted by the calendar year in which it ends. The tax year 2019 is from 01 July 2018 up to 30 June 2019. The tax year 2020 is from 01 July 2019 up to 30 June 2020.
Income from property, including rental income, is taxed at progressive rates. The tax base is the gross rent.
INCOME TAX 2018
|TAXABLE INCOME, PKR(US$)|
|Up to 400,000 (US$3,810)|
|400,000 – 800,000 (US$7,619)|
|800,000 – 1,200,000 (US$11,429)|
|1,200,000 – 2,400,000 (US$22,857)|
|2,400,000 – 4,800,000 (US$45,714)|
|Over 4,800,000 (US$45,714)|
|Source: Global Property Guide|
Capital gains realized by individuals from selling real property are not taxed in Pakistan unless sales of real property are part of the individual´s business.
Capital gains in connection with a taxpayer´s business activities are considered as business income and taxed accordingly.
Property tax is a provincial tax levied on the value of property. It is generally levied at a flat rate of 10% but the tax rates vary, depending on the province.
Property tax is levied at progressive rates in the Punjab province.
In the province of Sindh, property tax is levied at a flat rate of 20% on the annual rental value of the land and building.
Capital Value Tax
Individuals who purchase real property in urban areas or acquire the right to use the real property for more than 20 years are liable to pay capital value tax. The tax is levied at 4% on the property’s recorded value. If no property value is recorded, the tax is levied at PKR100 (US$0.95) per square yard of the property.