Tax on freelance and IT-export income under Section 154A of the Income Tax Ordinance — the final-tax regime for software and IT-services exports — compared honestly with what the same income would cost under the normal non-salaried slabs.
In short: IT-export income received through banking channels is taxed finally at just 0.25% of the gross amount if you are PSEB-registered, or 1% if not (non-filers pay double, per practitioner sources). On Rs 10 million of exports that is Rs 25,000 — against Rs 3,590,000 the same income would attract under the normal non-salaried slabs.
Section 154A final tax for the year
Rs 0
Rate applied
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Tax under Section 154A (final)
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Income after tax
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Same income under normal non-salaried slabs
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You save under 154A
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How it is calculated
Section 154A rate: 0.25% of the gross remittance if registered with and certified by PSEB; 1% if not (the 1% rate also covers export of other, non-IT services). The bank deducts it when the foreign currency is realised, and it is a final tax if you file your return and any required withholding statement.
Non-filer doubling: practitioners apply the Tenth Schedule so that persons not on the Active Taxpayer List pay 0.50% / 2% instead. This doubling is practitioner-sourced, not quoted from the section itself — confirm it in FBR's current withholding rate card before relying on it.
Validity: the Finance Act 2026 extended the 0.25% rate up to Tax Year 2029 (FBR Circular No. 02 of 2026-27).
Conditions to keep: proceeds through approved banking channels (an 80%-of-export-earnings banking-channel condition is widely reported by practitioners), an NTN and filed returns to stay on the Active Taxpayer List, and PSEB registration kept active.
Comparison column: the normal non-salaried slab table (First Schedule, Division I) — 0% to Rs 600,000; 15% to Rs 1.2M; Rs 90,000 + 20% to Rs 1.6M; Rs 170,000 + 30% to Rs 3.2M; Rs 650,000 + 40% to Rs 5.6M; Rs 1,610,000 + 45% above — plus the 10% section 4AB surcharge above Rs 10 million. The table was unchanged by the Finance Act 2026. The comparison treats the full remittance as taxable income with no expense deductions, so it flatters neither side deliberately — it shows the scale of the difference.
Worked example: Rs 10,000,000 of IT exports, PSEB-registered filer → 154A tax = Rs 25,000. Unregistered, the same income pays Rs 100,000. Under the normal slabs it would pay Rs 3,590,000.
Frequently asked questions
How much tax do freelancers pay in Pakistan?
IT-export income under Section 154A: 0.25% (PSEB-registered) or 1% of the gross remittance, final. Other freelance income falls under the normal non-salaried slabs.
What does Section 154A cover?
Export proceeds of computer software, IT services and IT-enabled services received through banking channels. The 0.25% rate runs to Tax Year 2029.
What if I am a non-filer?
Practitioners apply doubled rates (0.50% / 2%) under the Tenth Schedule. That doubling is practitioner-sourced — verify it in FBR's current rate card.
Is PSEB registration worth it?
At Rs 10M of exports it saves Rs 75,000 a year in tax alone (Rs 100,000 → Rs 25,000). For most active exporters, yes.
My client is in Pakistan — does 154A apply?
No. Local-client income is taxed under the normal non-salaried slabs, shown in the comparison line above.
Privacy: this calculation runs 100% on your device — your income never leaves your browser. Disclaimer: estimate only, based on Section 154A and the First Schedule slab tables (Finance Acts 2025 and 2026); the non-filer doubling is practitioner-sourced as flagged above. Not tax advice — confirm your position with FBR or a tax practitioner. Rates last verified: 2 November 2026.