Tax & Registration
Filer vs non-filer in Pakistan: what you pay more in 2026-27
Non-filers pay 10.5% to 18.5% tax on buying property against 1.25% for filers, 11.5% vs 2.75% on selling, and double on bank profit. Full table, tax year 2027.
Tax & Registration · Business & Trade
Freelancer tax in Pakistan: 0.25% or 1%, and why you must still file
Banks deduct 0.25% of IT export earnings if you're PSEB-registered and 1% if not. It's a final tax only if you file a return. Tax year 2027 rules, explained.
- PSEB-registered
- 0.25%
- Not registered
- 1%
- 0.25% valid until
- Tax year 2029
- Return required
- Yes, every year
Summarize it for me
AI Summary
A Pakistani freelancer paid from abroad for IT or IT-enabled services pays 0.25% of the money received if registered with PSEB, and 1% if not. The bank deducts it when the dollars arrive. It counts as your full and final tax on that income only if you file an income tax return, which you must do every year anyway. The 0.25% rate now runs to tax year 2029. The old full exemption and tax credit for IT exports no longer exist.
If clients abroad pay you for IT or IT-enabled work, your bank deducts 0.25% of the money when it arrives if you’re registered with PSEB, and 1% if you’re not. That’s your whole tax on that income, but only if you file an income tax return, which you have to do every year anyway. The 0.25% rate now runs to tax year 2029.
Tax on Rs 50 lakh of freelance export income
Rs 12,500 vs Rs 50,000
0.25% if PSEB-registered, 1% if not, tax year 2027
How is freelance income taxed?
Under section 154A of the Income Tax Ordinance, your bank deducts tax when it converts foreign payments for exported services:
| Freelancer | Tax on export proceeds (tax year 2027) |
|---|---|
| Registered with PSEB (IT or IT-enabled services) | 0.25% |
| Not registered with PSEB, or other exported services | 1% |
The Finance Act 2026 extended the 0.25% rate, which was due to end in 2026, up to tax year 2029. Registering with PSEB costs Rs 1,000 a year for a new freelancer. See PSEB registration.
Is this my final tax?
Yes, as long as you meet the conditions. The tax deducted is final on that income if:
- you file your income tax return, and
- you file withholding tax statements, if you have to.
If you don’t meet the conditions, or you opt out (a choice you make each year in your return), your income is taxed at normal rates instead. For non-salaried individuals in tax year 2027 that’s 0% up to Rs 6 lakh, rising to 45% on income above Rs 56 lakh.
What counts as IT or IT-enabled services?
The Ordinance defines them broadly. IT services include software development, maintenance, system integration, web design, web development, web hosting and network design. IT-enabled services include call centres, medical transcription, remote monitoring, graphic design, accounting, HR services, telemedicine, data entry, cloud computing and data storage.
What if a Pakistani client pays me?
That isn’t an export, so the 0.25% or 1% doesn’t apply. The Pakistani payer withholds tax instead (tax year 2027):
| Payment from a Pakistani client | Filer | Non-filer |
|---|---|---|
| IT and IT-enabled services | 4% | 8% |
| Independent professional services, e.g. a freelance software developer | 15% | 30% |
Is freelance income tax-free?
No. Two older reliefs are gone:
- the exemption for IT export income (clause 133 of the Second Schedule) was removed in 2021
- the 100% tax credit on IT export income was removed in 2022
Guides that still mention them are out of date. PSEB-certified startups can still get a 100% tax credit for three years.
What about YouTubers and influencers?
Since July 2026, a new section 154B makes banks deduct tax on social media platform revenue paid to content creators: 5% for filers and 10% for non-filers.
More guides: Tax & Registration.
Questions people ask
How much tax does a freelancer pay in Pakistan?
For tax year 2027, the bank deducts 0.25% of foreign IT or IT-enabled export proceeds if you're registered with PSEB, and 1% if you're not. If you file your return, that is your final tax on that income.
Do freelancers have to file an income tax return?
Yes. Section 114 requires a return from everyone whose income is under final taxation. The 0.25% or 1% only counts as final tax if you file.
Is freelance income tax-free in Pakistan?
No. The old exemption for IT export income was removed in 2021 and the 100% tax credit in 2022. Today the reduced rate is 0.25% for PSEB-registered exporters.
What if a Pakistani client pays me?
Then it isn't an export. A Pakistani payer withholds 4% (filer) or 8% (non-filer) on IT services, or 15% (filer) for independent professional services such as freelance developers.
What counts as IT or IT-enabled services?
The law lists software development, web design and development, hosting and network design as IT services, and call centres, graphic design, accounting, HR services, data entry, cloud services and medical transcription among IT-enabled services.
Sources
- Income Tax Ordinance, 2001 (amended up to 30.06.2026), FBR (accessed 7 Oct 2026)
- Withholding Income Tax Rate Card, Tax Year 2027, FBR (accessed 7 Oct 2026)
- Freelancer Registration, Pakistan Software Export Board (PSEB) (accessed 7 Oct 2026)
- Membership Benefits, Pakistan Software Export Board (PSEB) (accessed 7 Oct 2026)
- IT sector: Reduced WHT rate of 0.25pc stays, Business Recorder (accessed 7 Oct 2026)
- Govt extends benefits for IT companies by 3 years, ProPakistani (accessed 7 Oct 2026)
- Budget FY26-27: What relief measures has the government announced?, Dawn (accessed 7 Oct 2026)