How to file freelancers tax return in Pakistan? | Iris 2.0 | 2024

How to file freelancers tax return in Pakistan? | Iris 2.0 | 2024
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Welcome to our channel, dedicated to empowering freelancers in Pakistan with the knowledge and tools to navigate the tax return filing process with confidence. In this video, we provide a comprehensive guide on how to file tax returns for freelancers in Pakistan, covering everything from understanding tax obligations to step-by-step instructions for completing the filing process.
Introduction to Tax Filing for Freelancers:
As a freelancer in Pakistan, understanding your tax obligations and filing requirements is crucial for maintaining compliance with the law and managing your finances effectively. In this video, we'll walk you through the entire process of filing your tax return as a freelancer, ensuring that you have the information and resources needed to fulfill your obligations accurately and efficiently.
Understanding Tax Obligations for Freelancers:
Before diving into the tax filing process, it's essential to understand your tax obligations as a freelancer in Pakistan. We'll discuss the types of income that are subject to taxation, including earnings from freelance projects, consulting services, and any other sources of income. Additionally, we'll explore the tax rates applicable to freelancers and any deductions or exemptions that may apply to your situation.
Gathering Necessary Documentation:
One of the first steps in filing your tax return is gathering all the necessary documentation and records. We'll provide a checklist of documents that freelancers typically need for tax filing purposes, including income statements, expense receipts, bank statements, and any other relevant records. By ensuring that you have all the necessary documentation prepared in advance, you can streamline the filing process and minimize the risk of errors or omissions.
Law on freelancer income:
154A. Export of Services
1. Every authorized dealer in foreign exchange shall, at the time of realization of foreign exchange proceeds on account of the following, deduct tax from the proceeds at the rates specified in Division IVA of Part III of the First Schedule -
a) exports of computer software or IT services or IT enabled services 2 [where the exporter is registered with and duly certified by the Pakistan Software Export Board (PSEB).
b) services or technical services rendered outside Pakistan or exported from Pakistan;
c) construction contracts executed outside Pakistan 3 [: (da) foreign commission due to an indenting commission agent;
2. The tax deductible under this section shall be a final tax on the income arising from the transactions referred to in this section, upon fulfilment of the following conditions -
a) return has been filed;
b) withholding tax statements for the relevant tax year have been filed if required under the Ordinance;] and
c) sales tax returns under Federal or Provincial laws have been filed, if required under the law;
d) no credit for foreign taxes paid shall be allowed.
3. The provisions of sub-section (2) shall not apply to a person who does not fulfil the specified conditions or who opts not to be subject to final taxation:
4. Provided that the option shall be exercised every year at the time of filing of return under section 114.
5. The Board in consultation with State Bank of Pakistan shall prescribe mode, manner and procedure of payment of tax under this section.
6. The Board shall have power to include or exclude certain services for applicability of provisions of this section.
Export of Services: The rate of tax to be deducted under section 154A shall be :-
1. Export proceeds of Computer software or IT services or IT Enabled services by persons registered with Pakistan Software Export Board 0.25% of proceeds
2. Any other case 1% of proceeds
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