Freelancer tax,
simplified.

Freelancers exporting IT/IT-enabled services pay a final tax of 1% under Section 154A of the Income Tax Ordinance. If registered with PSEB (Pakistan Software Export Board), the rate drops to 0.25%. The tax is withheld by your bank when foreign remittances arrive, so no separate filing is needed for export income.

PSEB (Pakistan Software Export Board) is a government body promoting IT exports. Registering reduces your final tax from 1% to 0.25% — a 75% saving. Registration is done via the TechDestination portal (techdestination.pseb.org.pk), costs PKR 1,000, and renews annually. On annual export earnings of PKR 10 lac, you save PKR 7,500 by being registered.

Software development, web development, mobile app development, graphic design, video editing, content writing, digital marketing, SEO, virtual assistance, customer support, BPO services, and similar services delivered to foreign clients qualify. The income must arrive in Pakistan via banking channels (Wise, Payoneer, direct wire) and at least 80% must be converted to PKR.

Yes. Your bank issues a PRC for each foreign remittance you receive. This document is essential proof that the income qualifies for the reduced tax rate under Section 154A. Most banks issue PRCs automatically; if not, request one from your bank for each transaction.

Income from local Pakistani clients does NOT fall under Section 154A — it is taxed under standard income tax slabs after deducting business expenses. You should track local vs export income separately. Many freelancers operate as AOP (Association of Persons) for local work and use Section 154A for foreign work.

No, the 0.25% / 1% rate applies to all export income from the first rupee. There is no exemption threshold for IT export tax. However, if you pay the final tax under Section 154A, you do not need to add this income to your standard income tax return.