How this tax works
- When a foreign client’s payment is converted at your bank in Pakistan, the bank deducts tax under section 154A.
- The rate is 0.25% of the amount if you are registered with PSEB (up to tax year 2029), or 1% if you are not.
- If your return is filed (and withholding statements, where required), that is your final tax; no credit is given for foreign tax on this income.
- Otherwise the income is taxed at the normal rates for non-salaried individuals and the bank deduction is credited against it.
Example: income of Rs 300,000 a month, or Rs 3,600,000 a year. A PSEB-registered filer pays Rs 9,000 a year (Rs 750 a month); an unregistered filer pays Rs 36,000. At normal rates the same income would be taxed Rs 810,000: Rs 650,000 + 40% of the amount above Rs 3,200,000.
Yearly tax by income (2026-27)
| Monthly income | PSEB registered (0.25%) | Not registered (1%) | Normal rates |
|---|---|---|---|
| Rs 100,000 | Rs 3,000 | Rs 12,000 | Rs 90,000 |
| Rs 200,000 | Rs 6,000 | Rs 24,000 | Rs 410,000 |
| Rs 300,000 | Rs 9,000 | Rs 36,000 | Rs 810,000 |
| Rs 500,000 | Rs 15,000 | Rs 60,000 | Rs 1,790,000 |
| Rs 1,000,000 | Rs 30,000 | Rs 120,000 | Rs 4,939,000 |
For PSEB registration, filing your return and your withholding tax certificate, ask your bank and a tax adviser. Rules can differ for companies and associations of persons; this calculator is for individual freelancers.
Frequently asked questions
How much tax do freelancers pay in Pakistan in 2026-27?
If you export software, IT or IT-enabled services and the money comes into Pakistan through a bank, the bank deducts tax when it converts the foreign currency: 0.25% of the amount if you are registered with the Pakistan Software Export Board (PSEB), and 1% if you are not. If you file your income tax return, that deduction is your final tax on this income (section 154A and Division IVA of Part III of the First Schedule).
How long does the 0.25% rate last?
The Finance Act 2026 extended the 0.25% rate for PSEB-registered exporters of IT and IT-enabled services up to tax year 2029, which ends on 30 June 2029. Before that amendment it was due to end with tax year 2026.
What happens if I do not file a tax return?
The deduction is final only if your return has been filed. If you do not file, or you choose not to be taxed under this regime, your income is taxed at the normal rates for individuals and the amount the bank deducted is counted towards that tax. For a freelancer with a good income this is many times higher.
Which normal rates are used in the comparison?
Freelance income is not salary, so the comparison uses the rates for individuals other than salaried persons (clause (1) of Division I of Part I of the First Schedule), which go up to 45%, plus the 10% surcharge where taxable income is over Rs 10 million. The calculator also shows what the same amount would cost if it were salary, for reference.
Does this apply to income through Payoneer, Wise or a freelancing platform?
The deduction is made by an authorised dealer in foreign exchange (your bank) when the foreign currency is realised in Pakistan. Whether a transfer from a platform or payment service counts depends on how it reaches your Pakistani bank, so ask your bank how it was realised and for its proceeds realisation certificate (PRC). Income kept abroad is not covered by this deduction.
Guides
- Income tax slabs 2026-27 for salaried people in Pakistan, explainedSalary up to Rs 600,000 a year is tax-free in 2026-27; above that, rates rise from 1% to 35%.
- Selling on Daraz in 2026: fees, tax and how to price for profitDaraz takes a category commission, a 2.25% payment fee and a handling fee, and 1% or 2% income tax is withheld.
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Sources
- Income Tax Ordinance 2001, amended up to 30 June 2026 (FBR): section 154A; First Schedule Part III Division IVA; Part I Division I clause (1); section 4AB
- FBR Circular No. 02 of 2026-27 (8 September 2026), para 30: 0.25% rate extended to tax year 2029
- Pakistan Software Export Board: membership benefits (0.25% vs 1% on IT export proceeds)
This calculator gives an estimate for guidance. It is not official advice. Rates and rules change, so confirm important decisions with the relevant authority or a qualified professional. See how we calculate, or report a mistake.