How freelance income is taxed in Pakistan (and the PSEB 0.25% rate)
Two freelancers earn $30,000 a year each. One pays about Rs 21,000 in tax, the other about Rs 84,000. Same work, same city. The difference is one registration that costs Rs 1,000.
The rule: section 154A
Money you earn from foreign clients for services is treated as export of services. When it arrives in Pakistan through a bank and is converted, the bank deducts tax:
| You are | Rate on what you receive |
|---|---|
| Registered with PSEB (IT and IT-enabled services) | 0.25% |
| Not registered (any other export of services) | 1% |
Finance Act 2026 extended the 0.25% rate to tax year 2029.
When it's final
The deduction is your final tax on that income only if:
- you file your income tax return (and withholding statements if you're required to), and
- the money came in through a bank, which is what produces the deduction and your PRC.
You choose this treatment each year in your return. If you don't meet the conditions, the income falls under normal slab rates.
What counts as IT or IT-enabled
Software, web and app development, design, digital marketing, content writing, data work, virtual assistance, IT support and similar services delivered remotely generally qualify for PSEB registration. If your work is clearly outside IT and IT-enabled services, you're in the 1% bucket.
Registering with PSEB
Full walkthrough: PSEB registration step by step.
- Make sure you have an NTN (register on IRIS; your CNIC number becomes your NTN).
- Get an account maintenance certificate from your bank, in your own name.
- Create an account on the PSEB portal (now under Tech Destination) and choose Freelancer.
- Upload your CNIC, NTN and bank certificate, and pay the Rs 1,000 fee.
- Download the certificate and give it to your bank so it applies 0.25%.
Registration is renewed every year for Rs 2,000, and renewal needs your latest return.
Local clients are different
Income from clients in Pakistan isn't export income. It's taxed at normal business slab rates: nothing up to Rs 600,000, then 15%, 20%, 30%, 40% and 45% above Rs 5.6 million, plus a 10% surcharge if taxable income passes Rs 10 million. Pakistani companies paying you may also deduct tax at source.
YouTube and social media income: not 154A any more
From 1 July 2026, income from social-media platforms like YouTube, TikTok and Facebook has its own section, 154B. Banks deduct 5% (10% for non-filers), and for residents it's a minimum tax, not the 0.25% export rate.
Since SRO 1641(I)/2026 (23 September 2026), FBR also sets a minimum income for resident creators earning from users in Pakistan: the higher of what you actually received or Rs 195 per 1,000 YouTube views, less expenses capped at 30% of revenue. If you earned less than the views-based figure, you have to show evidence to the Commissioner. Advance tax is paid quarterly under section 147, and the income goes in a separate part of the return.
"Foreign remittance" is not the same thing
Money sent home by family abroad is a remittance. Payment for work you did is income. Declaring client payments as remittances to avoid tax is a mis-declaration, and the protection for remittances (section 111(4), up to Rs 5 million a year) does not cover payment for services.
General information, not tax advice. Rates are for tax year 2027 (1 July 2026 to 30 June 2027) from FBR's withholding rate card and Circular 2 of 2026-27, unless stated.