Bangladesh Rental Income Guide 2026 β Tax Rates, Deductions & WHT Rules
Rental income in Bangladesh is taxed at individual income tax (IIT) rates of 0-25% (progressive). There is no separate rental income tax. Key deductions include a 25% standard deduction on gross rental income for repairs and maintenance, plus actual property tax paid. Withholding tax (WHT) on rent is 10% for resident lessors receiving >৳25,000/month and 20% for non-resident lessors.
Rental income from property in Bangladesh is classified as "income from other sources" under the Income Tax Ordinance 1984 and is taxed at the individual's marginal income tax rate (IIT). The system provides a generous 25% standard deduction without the need for actual expense receipts, plus a deduction for property tax actually paid. Understanding the withholding tax (WHT) rules is important for both landlords and tenants.
Overview β Rental Income Taxed at IIT (0-25%)
Rental income is not taxed separately β it is added to your total income and taxed at your marginal rate:
π Tax Classification: Rental income is treated as "income from other sources" (not business income, unless letting is part of a business). It is aggregated with salary, business income, capital gains, and other income for the total taxable income.
π Tax Rates (2025-26): Progressive IIT rates apply: First ৳350,000 β Nil (male), First ৳400,000 β Nil (female/senior), Next ৳100,000 β 5%, Next ৳300,000 β 10%, Next ৳400,000 β 15%, Next ৳500,000 β 20%, Above ৳1,650,000/1,700,000 β 25%. Surcharge applies for high-wealth individuals.
π Joint Ownership: Where a property is jointly owned, rental income is divided among co-owners in proportion to their ownership shares. Each co-owner reports their share in their individual tax return.
No Separate Rental Tax
Unlike some countries that impose a separate flat tax on rental income, Bangladesh integrates rental income into the general income tax system:
π No Flat Rate: Rental income is not subject to a special flat rate. It is added to your other income and taxed at your applicable IIT slab rate (0-25%).
π No Surcharge on Rental Income: There is no property-specific surcharge or additional tax. However, if your total income exceeds certain thresholds, the standard minimum tax rules apply (minimum tax is 2% of turnover for businesses, but for individual rental lessors, minimum tax is 0.25% of gross rent if total income is below the threshold).
π Same Return: Rental income is reported in the same annual tax return (Form IT-11B/11BA/11BB) as your other income. There is no separate rental income schedule (unlike capital gains which have a separate form).
Deductions β 25% Standard Deduction + Property Tax
Landlords can claim two important deductions against rental income:
25% Standard Deduction for Repairs & Maintenance
π Automatic Deduction: 25% of gross rental income is allowed as a standard deduction without any supporting documentation. This covers repairs, maintenance, insurance, and other incidental costs.
π No Actuals Required: You do not need to provide receipts for repairs or maintenance. The 25% deduction is a blanket allowance. If your actual expenses are higher, you cannot claim more than 25% (the standard deduction is the maximum).
π Calculation: Gross rental income ৳500,000 Γ 25% = ৳125,000 standard deduction. Taxable rental income after standard deduction: ৳375,000 (before property tax deduction).
Property Tax Deduction
π Actual Expense: Property tax (holding tax) actually paid to the city corporation or municipality is deductible in full from rental income, on top of the 25% standard deduction.
π Evidence: You must have receipts or payment challans for the property tax paid. The deduction is for the tax year's actual payment, not the assessed amount.
π Example: Gross rent ৳500,000 β ৳125,000 (25% std deduction) β ৳30,000 (property tax paid) = ৳345,000 taxable rental income.
Other Allowable Deductions
In addition to the 25% standard deduction and property tax, the following may also be deductible (though the 25% standard deduction already covers most costs):
π Ground Rent: Leasehold ground rent paid to the landowner (if you are a leaseholder). Must be actual expense with supporting documents.
π Collection Charges: Verified collection expenses (e.g., rent collection agent fees). However, the 25% standard deduction already covers these.
π Interest on Mortgage: If you took a loan to purchase or renovate the rental property, the interest paid is deductible. The principal repayment is not deductible.
π Irrecoverable Rent: If a tenant defaults and you cannot recover the rent, you may claim a deduction for irrecoverable rent (subject to NBR approval).
WHT on Rent β 10% (Resident Lessor)
Withholding tax (WHT) applies to rental payments to resident lessors:
π Threshold: WHT applies when the monthly rent exceeds ৳25,000. If the monthly rent is ৳25,000 or less, no WHT is required.
π Rate: 10% of the gross rent. The tenant (or the person paying the rent) must deduct 10% before paying the landlord.
π Applicability: The WHT applies to rent paid by individuals and businesses. However, the practical application is primarily on businesses (as they are more likely to comply with tax rules). Tenants who are individuals may not always deduct WHT, but legally they should if the rent exceeds the threshold.
π Deposit to NBR: The tenant must deposit the withheld tax to NBR within 15 days of the following month. A TDS certificate (Form IT-5) must be issued to the landlord.
π Landlord's Credit: The landlord can claim the WHT amount as a credit against their total tax liability when filing their annual return. Excess WHT is refundable.
WHT on Rent β 20% (Non-Resident Lessor)
For non-resident landlords (including NRBs), a higher WHT rate applies:
π Rate: 20% of gross rent (vs 10% for resident lessors). This is the final tax for non-residents β they do not need to file a Bangladesh tax return for rental income unless they have other Bangladesh-source income.
π Who: A lessor who is not a tax resident of Bangladesh (i.e., present fewer than 182 days in the tax year). NRBs who are non-residents for tax purposes are treated as non-resident lessors.
π Treaty Relief: If the non-resident is from a country with a double taxation agreement with Bangladesh, the treaty rate may be lower (typically 10-15%). To claim treaty relief, the non-resident must apply to NBR for a certificate of residence and treaty eligibility.
π Final Tax: The 20% WHT (or treaty rate) is the final tax on the rental income. The non-resident does not need to file a separate tax return unless they earn other Bangladesh-source income.
Computation Example
| Item | Amount (BDT) |
|---|---|
| Gross Annual Rent (12 à ৳60,000) | 720,000 |
| Less: 25% Standard Deduction (repairs & maintenance) | (180,000) |
| Less: Property Tax Paid | (40,000) |
| Net Taxable Rental Income | 500,000 |
| Add: Other Income (Salary) | 600,000 |
| Total Taxable Income | 1,100,000 |
| Less: WHT Deducted by Tenant (10% Γ 720,000) | (72,000) |
| Net Tax Payable (after WHT credit) | Varies by slab |
Practical Tips for Landlords
π Ensure WHT Compliance: If your tenant is a business, ensure they deduct WHT at 10% (or 20% for non-resident) and provide you with the TDS certificate (Form IT-5). Without it, you cannot claim the credit.
π Keep Property Tax Receipts: Always retain the property tax (holding tax) payment receipts from the city corporation. These are your only deduction beyond the 25% standard deduction.
π Declare in Annual Return: Report rental income in your annual tax return. Use the net rental income (after 25% standard deduction and property tax). Attach rent receipts or tenancy agreements as supporting documents.
π Joint Ownership: If a property is jointly owned, the rental income must be split proportionally. Each co-owner reports their share in their individual return and claims their share of WHT credit.
π Non-Resident Landlords: If you are an NRB or foreign national renting out property in Bangladesh, the 20% WHT is your final tax. You do not need to file a return unless you have other Bangladesh income.