Freelancer IT Exemption Tax
Calculate final withholding tax on foreign IT remittances — 0.25% for PSEB registered, 1.00% for others.
PSEB vs Non-PSEB — How Much Do You Save?
PSEB registration saves you 75% of your withholding tax. Here's the difference on common monthly earnings:
| Monthly USD | PKR Received | PSEB Tax (0.25%) | Non-PSEB Tax (1%) | Savings |
|---|---|---|---|---|
| $500 | Rs. 140,000 | Rs. 350 | Rs. 1,400 | Rs. 1,050/mo |
| $1,000 | Rs. 280,000 | Rs. 700 | Rs. 2,800 | Rs. 2,100/mo |
| $2,000 | Rs. 560,000 | Rs. 1,400 | Rs. 5,600 | Rs. 4,200/mo |
| $3,000 | Rs. 840,000 | Rs. 2,100 | Rs. 8,400 | Rs. 6,300/mo |
| $5,000 | Rs. 1,400,000 | Rs. 3,500 | Rs. 14,000 | Rs. 10,500/mo |
Rate: 1 USD = Rs. 280. Adjust the exchange rate in the calculator above for current rates.
Frequently Asked Questions
What is the tax rate for PSEB registered freelancers?
Freelancers registered with the Pakistan Software Export Board (PSEB) enjoy a reduced final withholding tax rate of just 0.25% on their foreign IT remittances.
How much tax do unregistered freelancers pay?
If you are not registered with PSEB, your foreign IT remittances are subject to a 1.00% final withholding tax under section 154A of the Income Tax Ordinance.
Does the freelancer tax apply to all types of freelance work?
The 0.25% and 1.00% reduced rates strictly apply to IT and IT-enabled services (ITeS). Other types of non-IT freelance work may be taxed under standard business income rates.
How do I register with PSEB?
Apply online at pseb.org.pk. You'll need your CNIC, NTN, business registration (if applicable), and a description of your IT services. PSEB registration is free and typically takes 2–4 weeks. Once registered, your bank will automatically apply the 0.25% rate on inward IT remittances.
Do I still need to file an FBR income tax return as a freelancer?
Yes. Even though the 0.25%/1.00% is a final tax (meaning no further tax is owed on that income), you are still legally required to file an annual income tax return with FBR if your total income exceeds Rs. 600,000. Filing also keeps you on the ATL.
Can Upwork, Fiverr, and Toptal income qualify for the PSEB rate?
Yes. Income from major freelancing platforms — Upwork, Fiverr, Toptal, Freelancer.com — qualifies as IT-enabled services and is eligible for the reduced 0.25% PSEB rate (or 1.00% without PSEB). The key requirement is that the income is received as a foreign remittance through a Pakistani bank account.