How much tax do I pay on my Fiverr or Upwork earnings in Pakistan?

For most freelancers the tax is a flat percentage of what arrives from abroad, taken by the bank at the moment the foreign currency is converted. Section 154A of the Income Tax Ordinance sets up that deduction, and Division IVA of Part III of the First Schedule sets the rate. For tax year 2027 (1 July 2026 to 30 June 2027) the rate is 0.25% or 1% of the proceeds, depending on whether you are registered with the Pakistan Software Export Board (PSEB).

What does the law say?

Section 154A(1) requires every authorised dealer in foreign exchange, meaning the bank, to deduct tax “at the time of realization of foreign exchange proceeds” on account of the items it lists. Two of those items matter to freelancers:

• Clause (a): exports of computer software, IT services or IT-enabled services “where the exporter is registered with and duly certified by the Pakistan Software Export Board (PSEB).”
• Clause (b): “services or technical services rendered outside Pakistan or exported from Pakistan”.

Section 2 defines IT services, in clause (30AD), to include software development, maintenance, system integration, web design, web development, web hosting and network design. Clause (30AE) defines IT-enabled services to include call centres, medical transcription, remote monitoring, graphics design, accounting services, HR services, data entry, cloud computing and data storage, among others. Both lists say “include but not limited to”.

The rates are in Division IVA of Part III of the First Schedule:

Type of receipt	Rate for tax year 2027
Export proceeds of computer software, IT services or IT-enabled services by persons registered with PSEB	0.25% of proceeds (the schedule applies this rate for tax years 2024 up to 2029)
Any other case	1% of proceeds

When does the deduction become the final tax?

Section 154A(2) makes the deduction a final tax on the income from these transactions once these conditions are met:

1. the return has been filed;
2. withholding tax statements for the year have been filed, if the Ordinance requires them from you;
3. sales tax returns under federal or provincial law have been filed, if required. The proviso says this condition does not apply to a PSEB-registered exporter under clause (a).

Section 154A(2)(d) adds that no credit for foreign taxes paid is allowed.

Where the tax is final, section 169(2) applies: the income is not charged under any head of income, no expenses are deducted from it, and the tax deducted is not reduced by any tax credit. In plain terms, the bank’s deduction is the whole income tax on that income.

Section 154A(3) turns the final-tax treatment off for a person who does not meet the conditions, or who opts out at the time of filing the return. That option is exercised every year.

Worked example (illustrative figures)

Sana is a graphic designer in Lahore. In tax year 2027 her Upwork earnings reach her Pakistani bank account and are converted to rupees totalling Rs. 3,600,000. The figures are invented; the rates are the Division IVA rates.

If she is not registered with PSEB (1% row):

1. Proceeds realised: Rs. 3,600,000
2. Rate: 1%
3. Tax deducted: Rs. 3,600,000 x 1% = Rs. 36,000

If she is registered with and certified by PSEB (0.25% row):

1. Proceeds realised: Rs. 3,600,000
2. Rate: 0.25%
3. Tax deducted: Rs. 3,600,000 x 0.25% = Rs. 9,000

Graphics design appears in the section 2(30AE) list of IT-enabled services, so the 0.25% row is available to her only if she holds PSEB registration and certification. If she files her return and meets the other section 154A(2) conditions, Rs. 36,000 or Rs. 9,000 is her final income tax on those receipts.

What if …?

What if I am not on the active taxpayers’ list? The Tenth Schedule, which raises many withholding rates for persons not appearing on the active taxpayers’ list, says in rule 10, clause (ca) that it does not apply to tax collected or deducted under section 154A. The Division IVA rates stay as they are. Filing a return is still a condition for final tax.

What if my payment reaches me through a payment service before the bank? Section 154A attaches the deduction to realisation by an authorised dealer in foreign exchange. The Ordinance does not name individual platforms or wallet services, so it does not say at which step a particular provider’s transfer counts as realised.

What if I earn from YouTube or social media rather than client work? The Finance Act, 2026 added a separate withholding provision for revenue from social media platforms, with its own rate. It is a different regime and is covered on a separate page.

Common mistakes

• Treating 1% as a fee rather than tax. Section 154A calls it tax deducted, and under section 154A(2) it is the final tax only when the conditions are met.
• Assuming the lower rate applies to all IT work. The 0.25% row depends on PSEB registration, not just on the type of work.
• Deducting expenses first. Both rates apply to proceeds. Where the tax is final, section 169(2)(b) allows no deduction for expenditure incurred in deriving the income.

What to check in the official text

Read section 154A in full, including sub-sections (5) and (6): the Board, in consultation with the State Bank of Pakistan, prescribes the mode and procedure of payment, and the Board may include or exclude services. Any such notification is not held in this corpus. Check Division IVA of Part III of the First Schedule for the rates and the tax-year window of the 0.25% row. Provincial sales tax on services, which affects the sales tax return condition for non-PSEB exporters, is outside this corpus.