Does my freelance export tax double if I am not on the Active Taxpayers List?

What does the law say?

Section 100BA of the Income Tax Ordinance, 2001 says that the deduction of advance tax, the computation of income and the tax payable of a person not appearing on the active taxpayers’ list “shall be determined in accordance with the rules in the Tenth Schedule”. The same treatment reaches a person who is on the list but has not filed a return by the due date, or by an extended due date.

Rule 1 of the Tenth Schedule is the source of the “double tax” idea. Where tax is to be deducted or collected from a person not on the list, the rate “shall be increased by hundred percent of the rate specified in this Ordinance”.

Rule 10 then lists taxes to which the whole Schedule does not apply. Clause (ca), inserted by the Finance Act, 2022, reads: “tax collected or deducted under section 154A”. Section 154A is the section under which a bank deducts tax when it realises foreign exchange proceeds from exported services, including computer software, IT and IT-enabled services.

So the rate on your export proceeds is the ordinary rate in Division IVA of Part III of the First Schedule, whether or not your name is on the list.

What rate does the bank deduct, then?

Division IVA sets two rates for tax year 2027:

Type of receipt	Rate under Division IVA
Export proceeds of computer software, IT services or IT-enabled services by persons registered with the Pakistan Software Export Board	0.25% of proceeds, for tax years 2024 up to tax year 2029
Any other case	1% of proceeds

Section 154A(1)(a) covers software, IT and IT-enabled exports only “where the exporter is registered with and duly certified by the Pakistan Software Export Board (PSEB)”. A freelancer without that registration falls in the “any other case” row. Being off the active taxpayers’ list does not move you between these rows.

What does being off the list actually cost?

The cost sits in section 154A(2), not in the rate. That sub-section makes the deducted tax “a final tax on the income arising from the transactions referred to in this section” only when conditions are met:

1. a return has been filed;
2. withholding tax statements for the year have been filed, if the Ordinance requires them from you;
3. federal or provincial sales tax returns have been filed if required by law, a condition that the proviso switches off for a PSEB-registered exporter under clause (a); and
4. no credit for foreign taxes is claimed.

Section 154A(3) says the final-tax treatment in sub-section (2) “shall not apply to a person who does not fulfill the specified conditions”. A freelancer who has not filed a return fails condition 1. The tax deducted at 0.25% or 1% is still deducted, but it no longer settles the liability on that income on its own terms.

Worked example (illustrative figures)

Ayesha, a graphic designer in Lahore. She is not registered with the PSEB and is not on the active taxpayers’ list. Her clients abroad pay her Rs. 3,000,000 during tax year 2027, realised through her bank.

1. Section 154A(1)(b) applies to services rendered outside Pakistan or exported from Pakistan. Her case is “any other case” in Division IVA: 1%.
2. Tax deducted: Rs. 3,000,000 x 1% = Rs. 30,000.
3. The claimed “doubled” rate would be 2%, or Rs. 60,000. Rule 10(ca) of the Tenth Schedule rules that out.
4. If she files her return for tax year 2027 and meets the other conditions, the Rs. 30,000 is a final tax under section 154A(2). If she does not, section 154A(3) takes her outside the final-tax treatment.

Hamza, a software developer in Karachi, PSEB-registered. He receives Rs. 3,000,000 in the same year.

1. Division IVA row 1 applies: 0.25%.
2. Tax deducted: Rs. 3,000,000 x 0.25% = Rs. 7,500.
3. His ATL status does not change this figure.

What if I am on the list but file late?

Section 100BA(1) brings in the Tenth Schedule for a person on the list who has not filed by the due date. Rule 10(ca) still keeps section 154A tax outside the Schedule, so the rate on export proceeds does not rise. The late or missing return remains a problem under section 154A(2)(a) for final-tax status.

Common mistakes

• Assuming every withholding tax doubles for non-filers. Rule 1 is general, but rule 10 carves out named sections. Section 154A is one of them.
• Assuming the exclusion means filing does not matter. The final-tax status in section 154A(2) depends on a filed return.
• Mixing up exports of goods and exports of services. Rule 10 excludes the tax on each in a separate clause, (c) for goods and (ca) for services, and the rates and conditions differ.
• Treating “not doubled” as “no other effect”. Other taxes deducted or collected from you, if not listed in rule 10, can still be increased under rule 1 while you are off the list.

What to check in the official text

Read section 100BA and the Tenth Schedule, rules 1 and 10, in the official PDF, since our site copy of the Ordinance leaves out schedules. Read section 154A in full, and Division IVA of Part III of the First Schedule for the rates. Section 181A says only that the Board may institute the active taxpayers’ list and that it “shall be regulated as may be prescribed”; the rules that run the list, and any bank-level practice, are outside this page.