Are you a new freelancer worried about income tax filing and documentation? Don’t worry anymore because this blog has all the latest News about the freelancing income tax and its easy steps. As the world embraces the digital age, traditional processes are being transformed. One such change has been the migration of tax filing systems online. This shift is a welcome change for many freelancers and consultants, who now have the flexibility to file their Income Tax Returns (ITR) from the comfort of their homes.
To further support the industry, the Pakistan Software Export Board (PSEB) was created by the government. This body oversees the IT sector’s growth, legal changes, and other relevant matters. It licenses IT businesses and freelancers who offer IT services from or within Pakistan.
What is the Latest Freelancer News About Tax Relief in the Budget?
According to the 2023 budget, if you are self-employed or working as a freelancer in Pakistan and giving services to local or foreign clients, you are eligible to pay income tax. The tax percentage varies with the income, and if your annual income is more than $50,000, you must pay a 5% tax. If your yearly income exceeds 6 million dollars, the tax rate reaches 35%. Freelancers serving overseas clients are exempt from paying taxes on their income for at least three years.
But this year, the government has decided to put some relief on freelancers and give a 0.25% deduction on tax rates. This beneficial tax exemption will continue until June 30, 2026. In addition, freelancers can now get export refunds of up to $24,000 per year and are not required to register for sales tax.
Step-by-Step Guide To File ITR Online on E-Filing Portal
In the fast-paced world of freelancing and consulting, managing your finances efficiently is vital to success. Filing your Income Tax Return (ITR) is among the essential financial responsibilities. Luckily, technology has made this process easier, allowing you to file your ITR online.
Before filing your income tax as a Pakistani freelancer, ensure you have all the necessary documents ready. These include:
- Your National Identity Card (CNIC)
- Bank statement for the tax year you’re filing for
- Details of your income and expenses for that tax year
- Any tax credits or deductions you’re eligible for under the current law
Now, let’s go through the detailed step-by-step process for filing your income tax return.
Step 1: Sign Up for e-Filing
According to success-oriented Freelancer Tips, you must register as a freelancer on the Federal Board of Revenue’s e-Filing system. To create an account, you need to provide the following details:
- CNIC information
- Mobile number
After completing the registration correctly, you’ll receive your login details, password, and PIN via mobile and email. You’ll use these to access the FBR’s e-Filing system.
Step 2: Determine Your Taxable Income
Once in the e-Filing system, you must submit your tax declaration. Make sure to select the correct tax year for your return. Then, calculate your total income for that year – this is the money you’ve made as a freelancer. You can subtract your income from business expenses and other eligible deductions or tax credits. Qualified freelancer expenses include rent, employee salaries, and additional office costs.
Step 3: Wealth Statement
You’ll also need to report your expenses and assets bought under your or your dependents’ name. Personal expenses differ from business expenses and are not deductible when calculating taxable income. After entering all these details accurately, you must reconcile the expenses and assets with the income earned during the tax year.
Step 4: Submit Your Tax Return
After completing all the necessary information, you can submit your income tax return. You can pay online using any bank account or follow the portal’s instructions.
Step 5: Retain Your Tax Return Records
The Federal Board of Revenue may audit your income tax declarations. So, it’s crucial to record your declarations and the documents used to file your tax return – like account statements, expense receipts, and related documents. You’re required to keep these records for a minimum of six years.
Filing income tax returns as a freelancer in Pakistan may seem challenging, but it’s essential to avoid penalties and assessments from the Federal Board of Revenue.
Remember that law can change, so consulting with a tax expert could be helpful to ensure you’re meeting all legal obligations. Since the Income Tax Department often updates the online portal, staying current with the newest information can make filing easier. So keep checking all the freelancers news to stay updated.
In today’s world, where freelancing is more common, knowing how to handle your taxes online is essential. The e-filing portal is built to help you, making the process of filing taxes smoother and more user-friendly.
To stay up-to-date with the latest news about freelancing and the IT world, stay tuned to Freelance of Pakistan.