What did the 2026-27 budget change for freelancers, and how long does the 0.25% rate last?

The Finance Act, 2026 came into force on 1 July 2026, so its changes apply from tax year 2027 (1 July 2026 to 30 June 2027). For freelancers, three amendments in section 5 of that Act matter most: the export-of-services rate for PSEB-registered exporters, a new tax on social media revenue, and the rate on foreign card payments.

What did the Finance Act, 2026 change?

Provision	Before tax year 2027	From tax year 2027
Division IVA, row 1 (PSEB-registered IT exporters)	0.25% of proceeds for tax years 2024 up to 2026	0.25% of proceeds for tax years 2024 up to 2029
Division IVA, row 2 (any other case)	1% of proceeds	1% of proceeds (unchanged)
Section 154B and Division IIIAB (social media revenue)	Did not exist	5%, deducted by the bank or financial institution
Section 236Y and Division XXVII (foreign card payments)	5% of the amount remitted	0.5% of the amount remitted

Each row above traces to section 5 of the Finance Act, 2026 and to the consolidated Income Tax Ordinance as amended to 30 June 2026.

How long does the 0.25% rate last?

Section 154A requires the bank to deduct tax from foreign exchange proceeds of exported services at the rates in Division IVA of Part III of the First Schedule. The first row of that Division covers export proceeds of computer software, IT services or IT-enabled services by persons registered with the Pakistan Software Export Board. Before the budget, that row gave 0.25% “for tax years 2024 up to tax year 2026”. The Finance Act, 2026 substituted “2029” for “2026”.

So the 0.25% rate now covers tax years 2027, 2028 and 2029. Tax year 2029 ends on 30 June 2029. The law as it stands does not say what rate will apply to PSEB-registered exporters after that. Any change would need a later amendment.

The condition for the lower rate did not change. Section 154A(1)(a) still applies only “where the exporter is registered with and duly certified by the Pakistan Software Export Board (PSEB)”. Freelancers without that registration stay on the 1% row.

What is the new tax on social media income?

Section 154B, inserted by the Finance Act, 2026, requires every banking and non-banking financial institution to deduct tax when an amount is credited to a person’s account, where that amount represents revenues received from social media platforms. Division IIIAB sets the rate at 5%.

Section 154B(2) describes digital content creators and social media influencers as those earning from content on platforms including YouTube, Facebook, Instagram and TikTok. It also defines “payment” to include credits received through intermediaries such as online payment service providers.

Section 154B(3) makes the tax a minimum tax for a resident person and a final tax for a non-resident person without a permanent establishment in Pakistan. This is a separate regime from section 154A, with a rate twenty times the 0.25% PSEB rate.

What changed for paying foreign suppliers by card?

Section 236Y requires the bank to collect advance tax when a person completes a credit, debit or prepaid card transaction with a person outside Pakistan. Freelancers meet this when paying for foreign software subscriptions, hosting or advertising by card. The Finance Act, 2026 cut the Division XXVII rate from 5% to 0.5% of the gross amount remitted. Section 236Y(2) keeps the tax adjustable.

Worked example (illustrative figures)

Usman runs a small web development practice in Rawalpindi. The amounts are invented. The rates are the ones in the Ordinance for tax year 2027.

Export proceeds. His clients pay him Rs. 6,000,000 during the year.

1. If he is registered with and certified by PSEB: Rs. 6,000,000 x 0.25% = Rs. 15,000
2. If he is not: Rs. 6,000,000 x 1% = Rs. 60,000

Card payments abroad. He pays Rs. 200,000 by debit card for foreign hosting and design software.

1. Tax year 2027 rate: Rs. 200,000 x 0.5% = Rs. 1,000
2. At the old 5% rate the same payments would have carried Rs. 200,000 x 5% = Rs. 10,000

YouTube channel. He also runs a tutorial channel, and Rs. 400,000 of platform revenue is credited to his account.

1. Section 154B at 5%: Rs. 400,000 x 5% = Rs. 20,000

What if my income is only from client work?

Then section 154B does not touch you. It applies to revenues from social media platforms. Payment for client projects through Upwork, Fiverr or direct contracts continues to fall under section 154A and Division IVA.

Common mistakes

• Thinking the 0.25% rate now applies to everyone. The Finance Act, 2026 only extended the time window of the PSEB row. Non-registered exporters remain at 1%.
• Treating YouTube revenue as ordinary export of services. Section 154B was added specifically for revenue from social media platforms, at 5%.
• Assuming the card tax is a tax on income. Section 236Y collects advance tax on money sent abroad through card transactions, and that tax is adjustable.

What to check in the official text

Read section 5 of the Finance Act, 2026 for the exact amendments, then Division IVA and Division IIIAB of Part III and Division XXVII of Part IV of the First Schedule in the Ordinance as amended to 30 June 2026. Section 154B(4) lets the Board prescribe rules for identification and reporting. No such rules are held in this corpus. The same Finance Act also revised the rates on payments made by Pakistani clients for services, which is covered on the page about local clients.