How to file Income Tax Returns for Freelancers in Pakistan?


How to file Income Tax Returns for Freelancers in Pakistan?

Income Tax Return filing in Pakistan is a complicated and worrisome process for any person who has least or no knowledge about the process of taxation. It is important for any person to file correct Income Tax Return to avoid legal consequences. Through this article we will explain in detail the procedure to file Income Tax Return as a freelancer in Pakistan.

To begin with, it is important to ensure that all documents and information are readily available before you. Following are documents you will need to file income tax declaration as a freelancer in Pakistan:

  1. National Identity Card (CNIC)
  2. Bank Account Statement for Tax Year for which you want to file Income Tax Return
  3. Income and Expenses incurred during such Tax Year
  4. Any Tax Credits or Deduction available to you under the prevalent law


Step to Step process for filing of Income Tax Return of freelancer in Pakistan are detailed as below:


Step 1: Register for e-Filing

You will be required to register yourself as Freelancer. Income Return is required to be filed Online through E-Filing System of Federal Board of Revenue. You will have to register yourself on E-Filing System by creating your account by filling required information. For registration you will need to enter following information:

  1. CNIC details
  2. Mobile number
  3. Email
  4. Address

Once you have done the process right, you will receive your login, password and pin on your mobile and email. You will be required to use these credentials to access E-Filing System of FBR.


Step 2: Calculate Your Taxable Income

After accessing the E-Filing System, you will be required to file Declaration. It is important to choose the right Tax Year for which you are willing to declare you return. Next step is to evaluate the total income derived in a Tax Year. Income derived is money you made as Freelancer during the year. While calculating the income you are allowed to deduct business expenses and other eligible deductions or tax credits. Expenses which are allowed for deduction from income of freelancer include rent, salaries of employees and other office expenses.


Step 3: Wealth Statement

You will also be required to detailed personal expenses and assets acquired in your name or acquired in name of your dependents. Personal Expenses are different from Business Expenses and are not allowed for the purpose of deduction while calculating taxable income.

Once detail has been punched accurately, you will be required to reconcile the expenses and assets made out of income derived during the tax year.


Step 4: File Your Tax Return

Once you have completed the process, you will be required to submit your income tax return.


Step 4: Keep Record of Your Tax Returns

Income tax declarations are subject to audit by the Federal Board of Revenue. It is therefore, important to retain record of you declaration and documents you used to file the tax return declaration i.e Statement of Account, Expenses receipts and allied documents. Every Taxpayer is required to retain record of aforesaid documents for minimum of six years.


Process for filing income tax returns for freelancers in Pakistan may appear complex but it is mandatory to file income tax returns to avoid imposition of best judgment assessment by federal board of revenue, penalty and fine.