If you earn rent from property in Pakistan, your tax return needs more than just a rent receipt. 📋 Here’s exactly what to send for Tax Year 2026 (TY2026), covering 1 July 2025 to 30 June 2026. Filing opened on 15 July 2026, and the normal deadline is 30 September 2026.
Two Different Things: Section 7E vs Section 155 🏠
Section 7E — the old "deemed income" tax on owning property, whether you rented it out or not — was declared unconstitutional and void ab initio in May 2026. It’s gone, and it’s gone for good, not just from TY2027 onward.
But Section 155 — tax on the actual rent you receive — is completely separate and still fully applies. Don’t let the 7E news make you think rental income itself is now tax-free. It isn’t.
How Your Tax Works 💡
Your tenant (if they’re a company, business, or other withholding agent) deducts tax from your rent before paying you, at these rates for individuals and AOPs:
- Up to Rs. 300,000 a year: Nil
- Rs. 300,001 – 600,000: 5% of the amount over Rs. 300,000
- Rs. 600,001 – 2,000,000: Rs. 15,000 + 10% of the amount over Rs. 600,000
- Above Rs. 2,000,000: Rs. 155,000 + 25% of the amount over Rs. 2,000,000
If you’re not on the Active Taxpayer List (ATL), your tenant must withhold at double this rate. This is advance tax, not final tax — you still declare the rental income in your return, and the amount withheld is credited against what you owe.
Your Document Checklist 📂
For everyone, before you start
- ✅ CNIC copy, front and back
- ✅ Mobile number registered with FBR
- ✅ NTN number, if you already have one
- ✅ Last year’s tax return copy, if you’ve filed before
For your rental income, add these
- 📝 Rent agreement(s) for the year
- 📄 Tenant withholding tax certificate(s) (Section 155)
- 🏦 Bank statements showing rent received
- 🧾 Property tax / local rate receipts, if you paid any — this is a valid deduction against your rental income
- 🛡️ Insurance premium receipt, if the building is insured — also deductible
- 🏦 Loan or mortgage interest certificate, if the property is financed — the profit/interest portion is deductible
- 📄 Legal fees receipts, if you paid to defend your title to the property in court — also deductible
- 📉 Proof of a defaulting tenant, if you previously declared rent that turned out to be unrecoverable — ask us if this applies, the rules are specific
Two allowances are automatic and need no receipts: a repairs allowance equal to one-fifth of your rent, and a small allowance (up to 4% of rent) for admin and collection costs.
For your Wealth Statement (required for every filer) 📑
Under Section 116, every resident individual filing a return must also submit a Wealth Statement and Wealth Reconciliation Statement. For a landlord, that includes:
- 🏠 Value and address of the rented property, and any other property you own
- 🚗 Vehicle(s) you own, with approximate value
- 💵 Cash in hand, and value of gold or jewellery, if any
- 📈 Details of savings certificates, prize bonds, shares, mutual funds, or insurance policies
- 💳 Any loans or liabilities outstanding, including the property loan itself if still owed
- 🧾 A rough estimate of your personal/household expenses for the year
- 📄 Last year’s wealth statement, if available
Optional — only if these apply to you 💡
- 🏦 Withholding tax certificate on personal bank profit (Section 151)
- 🤝 Donation receipts, if you gave to an FBR-approved charitable institution (Section 61)
- 🏛️ Pension fund contribution receipt, if you contribute to an Approved Pension Fund / VPS (Section 63)
- 🕌 Zakat deduction certificate, if any Zakat was deducted from your account (Section 60)
Common Mistakes Landlords Make ⚠️
- Thinking Section 7E’s removal means rent is tax-free — it doesn’t. Section 155 on actual rent is untouched.
- Not declaring rent because tax was already withheld — withholding is advance tax, not final. You still need to declare it.
- Missing deductions — property tax, insurance, and loan interest all reduce your taxable rental income, but only if you send the paperwork.
- Falling off the ATL — your tenant must then withhold double, straight out of your monthly rent.
Frequently Asked Questions
Is Section 7E really gone for good?
Yes. It was declared void ab initio by the Federal Constitutional Court in May 2026, meaning it’s treated as if it never legally existed — not just cancelled going forward.
Do I need receipts for the repairs allowance?
No. It’s an automatic one-fifth of your rent, no paperwork required.
What if my tenant didn’t withhold any tax?
You’re still responsible for declaring and paying tax on the rental income yourself — the withholding obligation is on the tenant, but the tax liability is yours either way.
ClearConcept Academy offers FIA | ACCA | Tax Training & Consultancy Services, including full-service Tax Return Filing. Send your documents on WhatsApp: +92 309 6755747 or email info@clearconcept.academy and we’ll take it from there.
Sources: Income Tax Ordinance 2001 (as amended), Sections 15A, 60, 61, 63, 116, 155; First Schedule Part III Division V; Tenth Schedule Rule 1; Finance Act 2025; Federal Constitutional Court ruling on Section 7E, May 2026. Filing dates confirmed via FBR IRIS portal, July 2026.