A Step-by-Step Guide for Freelancers to File Income Tax Returns in Pakistan
Hello, self-employed people!
If you ever felt overwhelmed by the idea of Pakistan income tax filing, then know that you’re not the only one. The task may even seem daunting initially, particularly if you’re doing it on your own without any recommendations from the finance and human resources departments of a company.
The good news is that it doesn’t have to be difficult or stressful to file your taxes. You can actually handle it like a pro and steer clear of needless fines along the way with the correct advice (and a little preparation).
Let’s go over everything you need to know!
Step 1: Check Your Tax Category
First things first, ascertain your tax status. Because you work as a freelancer, you will be categorized as a non-salaried individual, and the taxes you must pay will depend on the type of work you do and where you do it.
Here’s how it breaks down:
- Service export to foreign clients? Great! Under Pakistan’s current tax laws (FY 2024–25), freelancers exporting services pay a lower fixed tax of 1% on export revenue.
- Whether registered with the Pakistan Software Export Board (PSEB)? Even better! You qualify for a further reduced tax rate of just 0.25% on export earnings — provided your registration is valid.
- Serving local clients in Pakistan? Then your income is subject to the standard non-salaried individual tax slabs, which range from 5% to 35% depending on your annual income.
Step 2: Register yourself and log in
Before you can file your taxes, you need to register with the Federal Board of Revenue (FBR) and obtain your National Tax Number (NTN).
This is made easy by the FBR Iris portal, which allows online registration.
Pay attention to your income and expenses: Keep detailed records of all your earnings, invoices, and approved business expenses, such as those related to marketing, hardware, software, and the internet.
Pro tip: Use an accounting app or a simple Excel sheet to make tax time easier.
Step 3: Calculate Your Taxable Income
Don’t worry, it won’t be difficult because we’ll only be doing simple math.
- Gross income: Your annual total income.
- Deduct expenses: Take any allowed business expenses and deduct them from your net taxable income.
- Apply the proper tax rate: If you are exporting services, use the 1% or 0.25% rate.
For FY 2024–2025, if your income is local, use the non-salaried tax slabs.
Step 4: File Your Income Tax Return
When everything is ready:
- Go to the FBR’s Iris portal.
- Enter your income, expenses, and any applicable tax credits.
- The refund deadline is September 30th annually after which you have to claim your refund.
- To remit taxes, use an approved bank or an electronic payment system (like JazzCash, EasyPaisa, or 1Link).
Important Points for FY 2024–2025:
- Registration at PSEB is now promoted for freelancers to be able to enjoy lower tax rates and privileges such as simplified export documentation and government incentives.
- E-filing has been made compulsory for most income slabs — even if you are earning below the tax threshold, return filing guards you against future legal troubles and enhances financial reliability.
- Active Taxpayer List (ATL) benefits: Being a filer means lower withholding taxes on mobile bills, vehicle registration, property transactions, banking, and more.
Concluding remarks
Apart from being mandatory by law, filing taxes as a freelancer in Pakistan is a prudent decision that enhances your financial profile, boosts your credibility, and makes you a more deserving candidate for loans, visas, and investments.
Don’t panic if you have no idea where to start; best consultancy firm like Corptax Solutions offer professional help with opening a business bank account, preparing tax returns, and setting up a business .
Be responsible, smart, and a filer from now onwards!