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Short answer: Money a relative abroad sends you as family support is not taxed in Pakistan, and the bank deducts nothing when it arrives. Freelance and IT export payments have 0.25% (PSEB registered) or 1% deducted, social media revenue 5% or 10%. Section 111(4) protects up to Rs 5 million a tax year from unexplained income questions, with your bank’s PRC.
Key takeaways
- Family money from a relative abroad is a gift, not income. No tax is deducted on receipt, filer or non filer.
- Section 111(4) covers up to Rs 5 million of foreign remittances per tax year (1 July to 30 June) from being added as unexplained income. It is protection, not an exemption.
- Freelancer and IT export payments: 0.25% if you are registered with PSEB, 1% otherwise. It is final tax only if you file your return.
- YouTube, TikTok and other platform revenue: 5% for filers, 10% for non filers under the new section 154B. It is a minimum tax.
- Non filers pay 0.8% when cash withdrawals in one day go above Rs 50,000, even when the money came from abroad.
How the remittance tax calculator works
The first question decides almost everything: what is this money? Pakistani tax law does not tax “remittances” as one thing. It looks at why the money was sent. The same USD 1,000 can be tax free, taxed at 0.25%, or taxed at 10%, depending on who sent it and for what.
- Pick the type of money. Family money from a relative, a gift from a friend, freelance or IT payment, social media revenue, goods export, or salary from a job abroad.
- Enter the amount and currency. For USD, GBP, EUR, AED or SAR, type your bank’s rate. Copy it from your PRC or bank SMS, not from Google, because banks use their own buying rate.
- Choose filer or non filer. Filer here means your name is on the Active Taxpayers List. You can check your ATL status by CNIC in a minute.
- Answer the extra questions that appear for your type: PSEB registration and return filing for freelancers, money already received since 1 July for family remittances, your largest cash withdrawal in a day for non filers, and foreign tax for a salary.
You get the amount in rupees, the tax the bank deducts with its rate and section, whether that tax is final, minimum or advance, the net amount, how much of your Rs 5 million limit is used and left, any cash withdrawal tax, and the paperwork to keep.
Family remittances and the Rs 5 million rule
Your brother in Dubai or your father in Riyadh sends money for household expenses. Is that income? No. Section 39(1)(la) of the Income Tax Ordinance taxes gifts as “income from other sources”, but it excludes a “gift received from relative as defined in sub-section (5) of section 85”. And there is no withholding section in the Ordinance for a home remittance to a resident individual, so the bank deducts nothing.
Then where does the Rs 5 million figure come from? It is in section 111(4) of the Ordinance, as amended up to 30 June 2026:
“Sub-section (1) does not apply to any amount of foreign exchange remitted from outside Pakistan through normal banking channels not exceeding five million Rupees in a tax year that is en-cashed into rupees by a scheduled bank and a certificate from such bank is produced to that effect.”
Section 111(1) is the unexplained income rule. If FBR finds money, assets or spending you cannot explain, it can add that amount to your income. Section 111(4) switches that rule off for up to Rs 5 million of foreign remittances a year, counted in rupees after the bank converts them.
So the limit is not a tax free allowance, and money above it is not taxed automatically. Above Rs 5 million you simply lose the automatic cover and must explain the source yourself: who sent it, how they are related to you, and the bank records. The Finance Act 2026 did not change this section, so the Rs 5 million cap still applies for tax year 2026-27.
Western Union, MoneyGram and exchange companies count
Since the Finance Act 2022, an explanation under section 111(4) says money received through money service bureaus, exchange companies or money transfer operators “shall be deemed” to come through normal banking channels. FBR’s Circular 05 also names Western Union, MoneyGram and Ria as normal banking channels and tells tax offices to read the conditions leniently.
The certificate: PRC or e-PRC
The last condition is a certificate from the bank. Today that is the Proceeds Realization Certificate (PRC) or e-PRC, and banks also issue a yearly statement of PRCs. FBR can verify e-PRCs online. Download them every year, even if nobody asks. Our guide to the proceeds realization certificate and how to get it shows the steps.
Section 111(4) protects real family money. If a payment is actually for your work, calling it a remittance does not make it tax free. It is business income, and the rules for freelancers below apply.
Gifts from friends and non relatives
Section 85(5) defines a relative in plain terms as: your ancestors (parents, grandparents), your descendants (children, grandchildren), any descendant of your grandparents (brothers, sisters, uncles, aunts, cousins), an adopted child, the same people on your spouse’s side, and the spouses of all of them.
A friend, a former colleague or a sponsor abroad is not on that list. On our reading of section 39(1)(la), a gift from such a person can be taxed as income from other sources at normal slab rates. No FBR circular confirms how this works for banking channel remittances, and section 39(3) adds an NTN condition whose effect on foreign remittances is not settled. That is why the calculator flags this case and does not give a tax figure. If the amount is large, ask a tax practitioner before you file.
Freelance and IT export payments
Money from Upwork, Fiverr, a foreign client or your own agency abroad is export income under section 154A. The bank deducts tax when it converts the foreign exchange, at the rates in Division IVA of the First Schedule:
| Who | Rate | Basis |
|---|---|---|
| IT or IT enabled services exporter registered with PSEB | 0.25% of proceeds | Tax years 2024 to 2029, extended by the Finance Act 2026 |
| Any other services export (non PSEB freelancer) | 1% of proceeds | Section 154A(1)(b) |
The rate is the same for filers and non filers, because rule 10 of the Tenth Schedule keeps section 154A out of the non filer increase. But the deduction is final tax only if you meet the conditions in section 154A(2), and the first one is that your return has been filed. Without a return, the income can be assessed at normal slab rates, with the deducted tax only as a credit.
Is PSEB registration worth it?
PSEB charges Rs 1,000 for a new freelancer registration and Rs 2,000 for renewal, each year. Registration cuts your rate by 0.75 percentage points. The fee pays for itself once your yearly proceeds pass Rs 133,333 (new) or Rs 266,667 (renewal). Read the PSEB freelancer registration guide for the documents.
The purpose code problem
PSEB’s FAQ says freelancer payments should arrive under SBP purpose code 9186. If your client payment lands as a home remittance instead, the bank deducts nothing, which looks like a saving. It is not. The money is still business income, the 0.25% or 1% final regime depends on deduction at realization, and slab tax could apply instead. We found no FBR instruction on fixing a wrong code later, so ask your bank to correct it at the time. For the full yearly picture, use the freelancer tax calculator for Pakistan.
YouTube, TikTok and social media revenue
From 1 July 2026, platform revenue has its own section, 154B, added by the Finance Act 2026. Banks and payment services deduct 5% when revenue from a social media platform reaches your account. FBR’s own withholding rate card shows 10% for people not on the ATL, because section 154B is not excluded from the non filer increase.
For a resident, this is a minimum tax: not refundable, and if slab tax on your profit is higher, you pay the difference with your return. This calculator shows only the bank deduction. To work out the full yearly tax, including FBR’s Rs 195 per 1,000 views benchmark, use the YouTube tax calculator.
Pakistan does not tax a remittance for being foreign money. It taxes what the money is for: family support is free, work and platform revenue are not.
Goods export proceeds
If you sell physical goods abroad, section 154 applies. The Finance Act 2026 raised the rate from 1% to 1.25% of the export proceeds, the same for filers and non filers, and it is a minimum tax. The extra 1% advance tax on exporters under section 147(6C) was abolished. The calculator shows the 1.25% deduction only. E-commerce export rules and EDF are not covered.
Salary from a job abroad
A resident who earns a foreign salary has three rules to know:
- Section 102: foreign source salary is exempt if foreign income tax was paid on it, and tax withheld by the employer and paid to that country counts.
- Section 103: where income is taxable in Pakistan, you get a credit for foreign tax paid, limited to the Pakistani tax on that income. Unused credit is not refunded.
- Section 51: a returning Pakistani who was not resident in any of the previous four tax years gets foreign income exempt in the year of return and the next year.
The calculator shows which rule applies, not a slab figure. If the salary is taxable, the salary tax calculator gives the slab tax. Remote work for a foreign employer while you live in Pakistan is a different question and is not covered here.
Filer vs non filer: remittance tax rates for 2026-27
| Type of money | On ATL | Not on ATL | Nature |
|---|---|---|---|
| Family money from a relative | 0 | 0 | Not income; s.111(4) cover up to Rs 5 million |
| Cash withdrawal above Rs 50,000 in a day | 0 | 0.8% | Advance, adjustable |
| IT or ITeS export, PSEB registered | 0.25% | 0.25% | Final if return filed |
| Other services export (non PSEB freelancer) | 1% | 1% | Final if return filed |
| Social media platform revenue | 5% | 10% | Minimum tax |
| Goods export | 1.25% | 1.25% | Minimum tax |
For a freelancer the rate does not change, but filing does: no return, no final tax. Getting back on the ATL as an individual costs a Rs 25,000 surcharge under section 182A. Compare every cost side by side with the filer vs non filer calculator, or follow the steps to become a filer in Pakistan.
Cash withdrawal tax for non filers
Section 231AB makes banks deduct 0.8% advance tax on cash withdrawals by people not on the ATL, when the total for one day goes above Rs 50,000. The old exemptions for accounts fed by foreign remittances were removed by the Finance Act 2021, so family money is not spared. The rate is not doubled for non filers, and the tax can be adjusted against your tax if you later file a return.
The calculator applies 0.8% to the whole day’s total once it is above Rs 50,000. The section could also be read as taxing only the part above Rs 50,000. Your bank’s practice decides; check your statement.
Worked examples
Rs 280 per dollar is only an example rate. Use your own bank’s rate in the calculator.
| Family money, filer | Family money, non filer | Freelancer, non PSEB, non filer | TikTok revenue, non filer | |
|---|---|---|---|---|
| Amount received | USD 1,000 | Rs 1,500,000 | USD 2,000 | Rs 300,000 |
| In rupees | Rs 280,000 | Rs 1,500,000 | Rs 560,000 | Rs 300,000 |
| Bank deduction | Rs 0 | Rs 0 | Rs 5,600 (1%, s.154A) | Rs 30,000 (10%, s.154B) |
| Nature | None | None | Final (return filed) | Minimum |
| Net received | Rs 280,000 | Rs 1,500,000 | Rs 554,400 | Rs 270,000 |
| Cash withdrawal in one day | Not asked | Rs 300,000, tax Rs 2,400 | None | Rs 100,000, tax Rs 800 |
| Note | Rs 4,720,000 of the cap left | Rs 4,000,000 already received: only Rs 1,000,000 covered, Rs 500,000 needs proof of source | PSEB would save Rs 4,200 | Filer would pay Rs 15,000 less |
Look at the second column. Rs 500,000 above the cap is still not taxable if it really is a gift from a relative. It just needs the relative’s details, the PRCs and proof of the relationship ready if FBR asks.
Now the freelancer, but with PSEB registration and a filed return: USD 2,000 at Rs 280 is Rs 560,000, the bank deducts Rs 1,400 (0.25%), and you receive Rs 558,600 as final tax. On Rs 3,000,000 a year without PSEB and without a return, Rs 30,000 is deducted, it is not final, and registration would have saved Rs 22,500.
Paperwork to keep
- PRC or e-PRC for every remittance, plus the bank’s yearly statement of PRCs. This is the certificate section 111(4) asks for.
- Sender details for family money: name, relationship and, if possible, a copy of the sender’s ID or passport.
- Purpose code on each credit: 9186 for freelancer payments, as PSEB advises.
- Bank statements and tax certificates showing the s.154A, s.154B or s.231AB deductions, so you can claim them in your return.
- Wealth statement entries: remittances and gifts go into the reconciliation of wealth that you file with your return.
For the practical side of choosing a channel and getting money into your account, see how to receive money from abroad in Pakistan.
Frequently asked questions
Is remittance taxable in Pakistan?
Family money from a relative abroad is not taxable and nothing is deducted. Payments for work are: 0.25% or 1% for freelance and IT exports, 5% or 10% for social media revenue, and 1.25% for goods exports.
Is there a limit on remittance to Pakistan?
There is no limit on how much you can receive. Section 111(4) covers up to Rs 5 million per tax year from unexplained income questions. Above that you can still receive money, but you must be able to explain its source.
Do I pay tax on money my brother sends from Dubai?
No. A brother is a relative under section 85(5), so his gift is not income under section 39(1)(la), and the bank deducts nothing. Keep the PRC for each transfer.
Is freelancer income from abroad taxed in Pakistan?
Yes. The bank deducts 0.25% if you are registered with PSEB and 1% if you are not. It is your final tax on that income if you file your return.
What is a PRC?
A Proceeds Realization Certificate is the bank’s proof that foreign money was received and converted into rupees. It is the certificate section 111(4) requires, and banks now issue it electronically as an e-PRC.
Does a non filer pay more tax on remittances?
Not on family money or freelancer payments: the rates are the same. A non filer pays double on social media revenue (10%) and 0.8% on cash withdrawals above Rs 50,000 in a day. A non filer freelancer also loses final tax treatment.
Is Western Union a banking channel for tax?
Yes. Since the Finance Act 2022, money through money transfer operators and exchange companies is deemed to come through normal banking channels under section 111(4), and FBR Circular 05 names Western Union, MoneyGram and Ria.
Is foreign salary taxable in Pakistan?
For a resident, it is exempt under section 102 if tax was paid on it abroad. If not, it is taxable at salary slabs, with credit under section 103 for any foreign tax. Returning expatriates may be exempt under section 51.
This calculator gives an estimate based on sections 39, 85(5), 111(4), 154, 154A, 154B and 231AB, Divisions IIIAB, IV and IVA of Part III of the First Schedule and the Tenth Schedule of the Income Tax Ordinance 2001 as amended up to 30 June 2026, with FBR’s withholding rate card for tax year 2027. Rates last checked 12 November 2026. It does not calculate slab tax on non relative gifts or foreign salary, yearly tax for creators, wealth statement entries, remittance reward schemes or bank fees. Results are estimates; your bank’s deduction and FBR’s assessment are final. For advice on your own case, ask a tax practitioner.