Income tax on the business slab, with the IT-export services tax shown separately.
Income tax
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Surcharge
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IT services sales tax
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Net after income tax
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Two taxes that get confused into one
Ask a Pakistani freelancer how they are taxed and you will often hear "five percent". That figure is real, but it is a sales tax on IT and IT-enabled services, not an income tax, and conflating the two leads to nasty surprises. This calculator keeps them apart on purpose. Your income tax is computed on the non-salaried business slab card run by the Federal Board of Revenue (FBR). The reduced services tax, when you treat the work as an IT or ITES export, is shown as a separate line so you can see both obligations clearly.
The distinction matters because the two taxes go to different places and behave differently. Income tax is on your profit and rises through progressive slabs. The services tax is charged on the receipts for a taxable service and is typically collected and remitted to a provincial revenue authority, though IT exports enjoy a reduced rate and concessional regimes. The tool is aimed at independent developers, designers, writers, and consultants who invoice clients directly and need to plan for both.
Working a PKR 2.4 million year
Take annual receipts of PKR 2.4 million on the business-slab treatment. The income tax builds up through the slabs the calculator applies. Treat these as the rates the tool models rather than as settled law for the year, and verify the current slabs with the FBR, since the Finance Act resets them most Junes.
| Slab | Rate | Tax |
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That leaves PKR 1,990,000 after income tax. There is no surcharge here because the income sits well under the PKR 10 million threshold above which the calculator adds 9% on the tax due. If instead you flip the treatment to IT or ITES export, the income tax stays the same PKR 410,000, and the tool additionally shows a 5% services tax of PKR 120,000 on the PKR 2.4 million of receipts, the rate it models for that head. The two numbers answer different questions and should not be added together as if they were one tax bill.
When the export route helps and when it does not
The export concession is attractive, but it is not automatic. Eligibility usually hinges on the work qualifying as an IT or IT-enabled service, registration with the relevant authorities, and bringing the foreign-currency proceeds through proper banking channels. A freelancer paid into an informal account, or doing work that does not fit the IT/ITES definition, cannot simply claim the reduced rate. A common mistake is assuming export status erases income tax altogether. It does not; the slab-card income tax still applies, as the example shows. Confirm both the qualifying conditions and the current reduced rate with the FBR and your provincial revenue authority before relying on it.
A practical tip on deductions
This tool taxes the receipts you enter, but the slab card is really meant to apply to net profit. If you run genuine business expenses, equipment, subscriptions, a portion of rent and utilities, you may be able to deduct them and enter a lower income figure here, which lowers the tax. Keep clean records and invoices. Entering gross receipts with no expense deduction is the safe, conservative reading, but it can overstate your real liability if your costs are significant.
Is the 5% IT rate a discount on my income tax?
No. The 5% the tool shows is a sales tax on the value of IT or ITES services, sitting alongside your income tax rather than replacing it. Treat them as two separate obligations. The income tax on the slab card and the services tax are calculated independently in this tool for exactly that reason.
Do I still file an income-tax return as a freelancer?
Yes. Filing is what puts you on the Active Taxpayer List, lowers the withholding on your bank and platform receipts, and lets you reconcile tax already deducted. Even when an export concession applies to part of your work, an annual return is how you settle the full picture with the FBR.
What changes once I cross PKR 10 million?
Above that income the calculator adds the surcharge, currently modelled at 9% of the income tax payable, on top of the slab tax. It is charged on the tax, not the income, so it scales with how much tax you already owe. Confirm the prevailing surcharge rate and threshold with the FBR, as both have moved in recent budgets.