Why and How Much Tax a Blogger Should Pay in Pakistan?

Bloggers’ community and those who earn their money through online resources, ever you thought that the money you earn is taxable? It’s little hard to digest, but yes, the money we earn through our blogs, forums, online portals and through any other online resource is taxable.

In this post I will try to explore on why and how much should we (online community) should pay taxes?

As per Federal Bauru of Revenues, following categories of individuals/entities should pay taxes,

  • Companies
  • Association of Persons (AOP)
  • Non Salaried Individuals
  • Salaried individuals

Bloggers and those who earn their money through online resources come under the category of “Non-Salaried Individuals”, or otherwise also called “Sole Proprietors”.

Why Should Bloggers Pay Tax?

If you have a look at Income Tax ordinance, 2001 (can be downloaded from here PDF File, 2.36 MB), it clearly narrates following cases where tax should be paid,

  • The profits and gains of any business carried on by a person at any time in the year;
  • Any income derived by any trade, professional or similar association from the sale of goods or provision of services to its members;
  • Any income from the hire or lease of tangible movable property;
  • The fair market value of any benefit or perquisite, whether convertible into money or not, derived by a person in the course of, or by virtue of,

With above mentioned points, taken from a legislation prove that any income we earn through blogs or otherwise through any resource should be taxed.

As a Pakistani citizen, it’s our responsibility to abide by the regulations and be responsible towards the act and the federation.

How Much Tax a Blogger Should Pay?

The amount of tax for each individual is dependent on his/her earnings. There are slabs defined by the FBR (which gets revised each year), to determine the amount of tax an individual or entity should pay. As we discussed above, that bloggers come under “Non Salaried Persons”, please read following chart to find out your tax per your annual income.

FBR_TAX_SLab_1

FBR_TAX_SLab_2

What is Taxable?

In simple words,

Taxable amount = All your Revenues – Operating Expenses (Hosting, advertising, editorial etc).

Meaning that if you earn Rs. 10,000 a month, it makes you earn Rs. 120,000 a year. This is your revenue, now exclude your expanses, for instance hosting costs you 10,000 a year, so your income will be = Rs. 110,000

You may exclude any other expanses (if any) from the revenues.

In this example, Rs. 110,000 is taxable – and as per table given above, 1 percent tax is applicable on this amount, meaning that Rs. 1,100 is the amount that you should pay to Government of Pakistan from your earning as tax.

What to Do?

Information provided in this post is just for reference, and cannot be taken as ultimate resource to measure taxes on your earnings. It is advised to consult an accountant, to find out the exact amount of tax payable. As mentioned above, tax rates keep on changing every year.

An accountant (an individual – maybe your cousin or friend of a cousin who did CA, ACCA, M.Com or similar education) or any accountancy firm to find out what rules to follow to calculate the tax and then ultimately paying it.

By the way, paying tax in Pakistan is not easy, I will narrate my experience of paying tax (sort of adventurous tale) in another post. Even getting an NTN (National Tax Number, or the basic key to pay tax) can be a tough job to do for a common person.

So be patient, while you are serving your country.

Note: Government of Pakistan has given tax exemption on the income from export of computer software or IT Services or IT Enabled Services up to the period ending on 30th June, 2016. According to the Income Tax Ordinance, 2nd Schedule clause 133:

Income from export of computer software and its related services developed in Pakistan: Provided that the exemption under this clause shall not be available after the 30th day of June, 2016.

Explanation: – For the purpose of this clause

A-    “IT Services” include software development, software maintenance, system integration, web design, web development, web hosting, and network design, and

B-    “IT enabled Services”  include inbound or outbound call center, medical transcription, remote monitoring, graphics design, accounting services, HR services, telemedicine centers, data entry operations [locally produced television programs and insurance claims processing]

Tech reporter with over 10 years of experience, founder of ProPakistani.PK


  • adeeel

    i guess the tax should me increased……. mai tax k haq mai houn

    • Ali S

      WOW I am amazed at the simplicity of the Pakistan’s tax code. I am an accounting student in US and the FBR’s code is equivalent to about 3 chapters of my introduction to Tax accounting textbook. I wish USA would adopt the FBR’s code (but then how would we finance the wars?)

      • Zee

        Trust me, US tax system makes more sense (though Pakistan tax system is being upgraded).

  • imran

    I suspect if the Income tax is applicable to Google adsense Earnings ? or earnings received by other overseas ad networks… who don’t operate ‘locally’ in Pakistan… I am not an expert on this matter, would like to have more clarification on this.

    • Any income, by any means, if it exceeds the taxable limit, will be taxed

      • shahnawaz

        any earning which is earned or received by overseas is not come under tax net…..

  • This was a much needed article Aamir bhai. Thanks a lot for the research.

  • Mansoor Mustafa

    mEANS K if if we earn under One lack per year we dont have to pay tax for it… Am i right…

    • yea, correct

      • Shahid

        The income specified is per annum not monthly

  • Hidden Eyes

    Informative.. I like that one..

  • Caffeine

    We do Pay taxes here for our blogs, But in Pakistan blogs are not registered under the companies ordinance, So you are still free to enjoy the liberties of Web.

  • zubair

    we are paying taxes what we get in reponse lawlessness bomb blasts & corrupt administrators.
    Just writing these words with heavy heart
    May GOD help us

    • Fighting lawlessness isn’t free. Your taxes play a role in that, however minor.

    • Shahbaz Hussain

      Brother, one day it all will be fixed. We are playing our part, let government and law agencies play their role. Its a massive job for them. If we Pakistanis keep taking care of our responsibilities we will see a new day.

  • Aammuk

    Hi,

    It’s not a relevant comment but can anyone tell me how to subscribe for Express news mobile alert. Or can anyone give me list of all available news alerts for mobile phones. I think Express News is the cheapest.

    Thanks.

  • Yasir

    As far as I know, adsense income is exempt from tax.
    Please check.

    • I think the article puts forth a good explanation for why it’s not exempt. Why do you think it’s exempt?

  • Altaf

    nice article!

    all kind of income is taxable, and being loyal citizens, we shouldn’t say no to standard taxes!

  • Muhammad Ali

    its not good yar….in islamic system revenue generating methods are totally change

    • How do we get from the current situation to an “Islamic” revenue system?

  • husnain1985

    “Money we earn through our blogs, forums, online portals, freelance and through any other online resource” I am new to this concept, can anyone plz answer some of my questions

    Q1: Who earns money from blogs, forums, online portals?

    Q2: How can anyone earns money through blogs, forums and online portals?

    Q3: And how much anyone can earn?

    Q4: Plz give my links or resources so i can get more detailed info on this concept…

    Thanks.

  • umair

    i would say being bloggers we are a responsible group of people and the fulfillment of law and order in our posts to our incomes should be one important factor. I would only say that taxes should be paid by everyone no matter who he is .. and bloggers through their actions should set an example for our country which is teemed by people who would evade taxes and then expect the country to prosper thinking money comes out of a gold mine …

    taxes are the rule of the day around the world. and country having the highest tax rates are the best today as people are contributing to the treasury of the government… Americans payed taxes with all their heart and souls in World war 2 and the most tax rate also existed then as the country was in a state of war … although government did run a lot of campaigns to garner support for the tax regime but it was the normal man who contributed the most and made the war successful by paying the most taxes and also donating to the treasury for the survival of the country ,,,

    long story cut short please pay tax even if u are the only one doing so .. remember u are doing good for your country .. and if u say our officials are corrupt i would only say one thing good inspires good, bad inspires bad .. its time to inspire, lead and change

  • i we think already paying…by baying bills of resources which we are using

  • Awais

    Its spelt “expenses”

  • Awais

    I would recommmend visiting the FBR website for more information on tax or your nearest regional centre. They will more then help.

    ACCA’s will not be able to help much, for they mostly learn GBritain tax and not pakistani (Unless opted for, which is rare.)

  • Aamir bhai I still have some doubts here.

    I somewhat agree with those saying that tax on Adsense earnings is not applicable since the revenue is US based.

    Also because the equipment, bandwidth and other things we are using are US based.

    Any light on this?

    • Shahid

      There is no confusion

      Income Tax Ordinance 2001

      Section 101(16)
      An amount shall be foreign-source income to the extent to which it is not Pakistan-source income.

      Which is followed by

      TAXATION OF FOREIGN-SOURCE INCOME OF RESIDENTS

      102. Foreign source salary of resident individuals.- (1) Any foreign-source
      salary received by a resident individual shall be exempt from tax if the individual
      has paid foreign income tax in respect of the salary.

      The ITO 2001 allows prevention of double taxation i.e from a foreign country and in Pakistan.

      As a responsible citizen it won’t be wrong to pay Income Tax even if there is legal loop hole, which there isn’t, unless you don’t want to pay taxes and then cry about the state’s inability to prevade basic welfare

    • As per my personal understanding, that’s fine as far as you are spending that money outside Pakistan, or you are not using Pakistani infrastructure for living your life.

      Rest, Shahid has quoted from the legislation to prove that the money we get from outside Pakistan is taxable.

  • Ejaz Ahmad

    Salam

    I am web designer and working in a company and doing freelancing. i read you article but i m not agree with this. i m doing work in a company and paying tax on monthly bases. i m paying tax in bills, in house hold things, eatable things and in other like petrol, medicines, telecom, transport, banks,Internet etc. :)
    and if someone doing effort on personal bases and not getting any kind of help from Govt. then why they pay tax on their personal effort. Is govt. facilitating them ? Providing instruments and any kind of help ? Nothing… you know very well. We are just paying on all things no any relaxation from govt.
    blogger/freelancer is working on his personal resources like PC(prices already have been increase) :) , Internet( Not free, paying with tax) :), Electricity( as you know about conditions of load shading and bills, we are using too much expensive UPS) :) SKILLS/EFFORTS( what is doing govt. for this. is there any free training centers from govt.? any kind of activities for this ?) :) Nothing………

    if govt. want tax then govt. should have to facilitate us.

    • It’s true that a taxpayer doesn’t get all their money’s worth, but that doesn’t mean depriving the government of taxes will make things better for everyone.

  • Riz

    Nice post but couple of years ago when I was freelancer and not doing any other job, I consulted an accountant to know If my earning is taxable or not .. and he claimed that Govt of Pakistan has removed the TAX from exports related to IT untill 2020.

    Aamir what you say?

    • Software exports are exempted, however, we need to identify if its services or development. (You may consult an expert to get authentic and final verdict on it)

      However, i can confirm you that adsense is not exempted.

      • Pakistani blogger

        All IT related services are exempt from tax AFAIK. Surely that includes adsense and other ad networks?

      • Pakistani blogger

        Actually here is the relevant information from an authoritative source:

        http://www.pseb.org.pk/item/amendments#holiday

        ——————————————
        A- “IT Services” include software development, software maintenance, system integration, web design, web development, web hosting, and network design, and

        B- “IT enabled Services” include inbound or outbound call center, medical transcription, remote monitoring, graphics design, accounting services, HR services, telemedicine centers, data entry operations [locally produced television programs and insurance claims processing]
        ———————————

        So I guess since we are website developers of a sort we are exempted?

        • Thanks, i have added this information in the post. However, earning through adsense doesn’t come under IT export or development :-s

          That’s how i think… what you say?

          • Riz

            Well aamir, If I develop a website ( it comes under IT-Service ) and put adsense or any other advertisement on it hen we can not separate these two things. Adsense will be part of it aswell.

            Isn’t it ??

            • Riz, i believe developing a website and then earning from it are different things – rest you can perceive it the way you like : – )

              • Muhammad Naeem

                IT means Information Technology and a Website is a collection of information. By launching a website, you are delivering information using information technology. Adsense income is based upon your website. Any information technology services based income is tax free and secondly you are providing software based services to Google which is a foreign body and a website is a software application which makes it again tax holidy. Please investigate before you spread some info.

              • Ali Hassan

                Any how they are different ? Doesn’t Developing generate revenue ? Do we develop for free ? Come on !!!

          • Pakistani blogs

            Of course it comes under IT export. Adsense and other ad companies are foreign entities right? Google sends us money from the US right? So we are exporting IT services and earning valuable foreign exchange for Pakistan. It is only right that the govt. of Pakistan reward us by providing us with tax exemption which they have done.

        • AK

          Does it apply on individual (freelancer) also ?

  • Mohammad Farzan Hussain

    Thanks for sharing this great information about Tax …

  • Great Article Aamir bro:)

  • Shahzad Muzaffar

    I think one thing is wrong here. Tax rate are for the income bands. e.g If you earn 1,10,000Rs/year then
    – On first 1,00,000Rs you pay 0%
    – On additional 10,000Rs you pay 0.5%
    so total tax for an income of 1,10,000 should be 50Rs (i.e. 0.5% of 10,000).

    If we calculate as mentioned in the artical then for a person who earn
    a- 1,10,000Rs should pay 550 as tax
    b- 1,10,001Rs than tax will be 1100Rs i.e. this guy is actually getting less than what (a) got after paying tax.

    • That’s the regulation – we can’t complain it unless in National Assembly : – )

      • Shahzad Muzaffar

        ah you are right :-) I just read the examples given in here http://www.fbr.gov.pk/newdt/circulars/2008/2008circluar06.pdf

        So they have changed it because when I was in Pakistan (paying taxes 10 years ago) then it was based on income bands anyway we have either very stupid or very intelligent ppl sitting in FBR :-)

        By the way, I noticed that now 1,80,000Rs is the tax exemption limit.

      • Shahzad Muzaffar

        now I know why ppl. do not pay taxes in Pakistan …. it is so complicated :-) They are different rate for nearly every person in pakistan (I am sure ppl. in national Ass pay -50% tax :-) ) For IT ppl. it is correct what is written in the article :-) I should have read the ITaxOrdinance2001ut15-08-2009.pdf doc before sending the comment but still this document is confusing …. i need to read it bit carefully :-)

        • |TopGun|

          Tax is only on the taxable income. He will pay option (a). There is no tax on the initial income within nontaxable limit. That’s what the law says and that is also what makes sense.

  • Shahzad Muzaffar

    (not a question/comment about this artical but)
    any idea how much import tax one needs to pay if I buy few (order of 100) GSM USB modems from China?

    • check FBR (www.fbr.gov.pk) for import taxes on certain items – or you may try contacting their helpline

  • khan

    jis cheez main pakistan taraqi krta ha ya log text laga daty han

  • JK III

    Wow, great and insightful article. It had never occurred to me that blogs could be taxable.

    And also, for “smaller amounts”, taxes aren’t that bad. I mean, 1 percent on 1 lakh Rs, thats not bad at all !

  • Muhammad Naeem

    First of all, I am really surprised to see irresponsible post here on Propakistani. I request the propakistani admin to remove or atleast edit this post to represent correct info. Right now it is totally misleading people. The guy who wrote this post has simply no knowledge of income tax regulations in Pakistan.
    If Blogs and websites are not under the IT category then what else is? Please open a good dictionary and take a look at IT definition. IT means Information Technology.What do you provide with a website?? Isn’t it information??? Come one dear do some research. Secondly,
    take a look at this. Not only IT income but even “IT based” income is tax free. My dear Even income from hosting services is tax free.

    TAX HOLIDAY FOR EXPORT OF SOFTWARE

    “Government of Pakistan has given tax exemption on the income from export of computer software or IT Services or IT Enabled Services up to the period ending on 30th June, 2016. According to the Income Tax Ordinance, 2nd Schedule clause 133:”

    I demand immediate change or deletion of this post on Propakistani since it is destroying your website repute and misleading people.
    In the end, I would love to mention that i am a ITP (Income Tax Practitioner)

    • Muhammad Zohair Chohan

      Nice Objection! By the way the guy wrote the article is Aamir Atta, Founder and Administrator of ProPakistani, yeh! he don’t know tax regulations of Pakistan very well as he is the IT guy, anyway thanks for your feedback!

    • Fahmid

      It’s because of the tax practitioners like you Pakistan is dying today. FBR rapes the likes of you that’s why you are always speaking against the taxes.

    • AK

      Does it apply on individual (freelancer) also or its only for registered company ?

  • Shahzad

    Hi,

    I noticed that TAX RATE for individual and Salaried person are very different. If you look at the “Incom TAX from Salary” ( http://www.fbr.gov.pk/tpef/incomeTaxBorchure.asp ) you fill find a huge difference. If you are individual and earning 500K from your online blog etc. you are paying 12.5% (approx 62,500) and if you are a salaried person you are paying only 3.5% (Rs. 17500).
    What you say

  • very informative!
    tax sab ko dena chaye…..i will pay IA when i will go above that payment threshold! ;)

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  • umar

    As far i know by reading the tax code for IT company and service providers. i believe bloggers are exempted cause they are also providing a kind of public IT service. so they must be exempted. but govt can put a scale on that if the income from websites increase on certain scale then we have to pay tax. so far our bright politician are not aware of this source so we are exempted :D :D Enjoy till an educated politician come and impose tax on this field ;)

  • omer

    Bhai chup chaap kamatay raho kya zaroorat hai tension lenay ki.. Atleast i would not pay tax to this corrupt mafia.

    • Najam

      you are right! basically we are the one of most powerful group in Pakistan who are saving our country , we get revenue for country so we should be out of this tax policy ,
      whatever we whole people earn from other countries our leaders take them back to swiss bank accounts.
      but for country we can do anything but not for those corrupt leaders.

  • AK

    I have not registered myself as a Business Person for the past 2 years and I have been accepting money for IT services(web development from home) from foreign clients. Due to some reason i want to declare all that income for the past 2 years and claim tax exemption, so that all of my past income is considered legal. Please advise if this is possible.

  • AK

    I have not registered myself as a Business Person for the past 2 years and I,m working as a web-developer (working from home) for foreign clients.Due to some reason i want to declare all that income and claim tax exemption, so that all of my past income is considered legal. Please advise if this is possible.

  • The word expenses is written expAnses. Correct that.
    Nice post.

  • RT

    the employed person’s salary, in IT sector, also comes under the tax network? I’m confused.

  • Ali

    Amir is freelance income exempted from tax?

    If YES, do we need to obtain a tax exemption certificate from FBR or what?

    If NO, then what is the percentage?

    Someone told me freelnce income in Pakistan is exempted from tax because it brings foreign exchange USD into the country, which is beneficial for economy!

    Also I tried to find some FBR docs & did some research on internet which explained that freelance income is exempted from tax until June 2016, BUT it is necessary to take exemption certification from FBR, to be on the safer side.

    • aamir7

      you are not exempted. A 10% full tax is applicable on freelance revenues. Check with any tax consultant for more details.

  • Shahbaz Hussain

    Aamir can you tell the process of NTN registration for a Freelancer? I am in favor of paying tax and every individual should register for NTN regardless of their income. Our government will only become strong if and only if we fund them by paying our taxes. Thanks

  • Fakhar

    A much needed write up. I wonder if somebody did already point this out? Federal Bauru of Revenues; is actually Federal Bureau of Revenue.