Business & Freelancer Income Tax Calculator

If you earn from a business or profession, you are taxed on your profit: revenue less the expenses you can show were incurred wholly for the business. Sole proprietors and professionals file as individuals, partnerships and other associations of persons file as AOPs, and both use the same non-salaried slabs. Companies pay corporate tax at different rates and are not covered here.

Tax on exports that qualify for a final tax regime is worked out separately on the gross proceeds and kept out of the slab calculation. Add the two and you have your total tax for the year, which the calculator shows with an effective rate (tax as a share of income) and a marginal rate (the rate on your next rupee of profit).

Two things lower the bill. A pension contribution and approved donations earn credits (the VPS pension calculator shows the tax credit a contribution earns), and zakat you pay comes off your income (the zakat calculator works out how much you owe).

The slabs for individuals who are not salaried, and for AOPs, are unchanged from tax year 2026. They run from nil up to 45% on income above Rs 5,600,000.

An AOP that is a professional firm, meaning law or its professional body does not allow it to incorporate, pays 40% instead of 45% in the top band. At Rs 12,000,000 that lowers the tax with surcharge from Rs 4,939,000 to Rs 4,587,000. Turn on the professional-firm option under More options if this is you and confirm it with your adviser.

Many people ask what a freelance or business income would cost in tax compared with a job paying the same. The table shows both, using the engine behind the calculator, for tax year 2027.

The gap is large because the salaried table is lighter at every level and, from tax year 2027, has no surcharge. It also explains why business income should be measured after real expenses: each rupee of expense you can document saves tax at your marginal rate, which reaches 30% to 45% at higher profits. For an employee comparing a job offer with freelancing, the salary tax calculator gives the other side of this table.

Two regimes tax export income at a low rate on the gross proceeds instead of the slabs. The tax is deducted by the authorised dealer (your bank) when the foreign exchange is realised.

• IT and IT-enabled services, 0.25%. For software, IT services and IT-enabled services (call centres, graphic design, accounting, data entry and similar) exported by a person registered with and certified by the Pakistan Software Export Board. The reduced rate was extended to tax year 2029.
• Other services exported, 1%. For services rendered outside Pakistan or exported from Pakistan that do not qualify under the IT rule.

The tax is final when you file your return and meet the other conditions in section 154A (no foreign tax credit is allowed). You can choose each year, when you file, not to be taxed under the final regime. Because expenses cannot be deducted from final-tax proceeds, the regime suits exporters whose costs are low compared with their receipts.

The size of the difference is easy to see. Rs 10,000,000 of PSEB IT export proceeds pays Rs 25,000. The same Rs 10,000,000 of proceeds as other service exports pays Rs 100,000, and as business profit at the slabs it would pay Rs 3,590,000. You can also split income: Rs 2,400,000 of business profit plus Rs 8,000,000 of IT exports pays Rs 410,000 at the slabs plus Rs 20,000 final tax, Rs 430,000 in all. Turn on several kinds of income under More options to try your own mix.

Revenue from social media platforms is different. Banks deduct 5% (10% for non-filers) under section 154B, but for a resident creator it is a minimum tax rather than a final one, so you still report the income and pay the slab tax if that is higher.

Business tax is not paid in one go on filing day. Customers who are required to withhold deduct tax from payments to you (for example under section 153), and individuals whose latest assessed taxable income, outside salary and final-tax income, reached Rs 1 million, as well as AOPs, pay advance tax in quarterly instalments (section 147). All of these are adjustable: they are credited against the tax computed on your return, and the balance is what you pay or claim back. Enter what has already been withheld or paid in the advance tax card to see your balance.

The final tax on exports is different. It settles the tax on that income, so it does not reduce the slab tax on your other income. Keep your bank advices and withholding certificates, and file by September 30 after the tax year unless the FBR extends the date. For rental income see the rental income tax calculator, and for gains on shares the capital gains tax calculator.