Pakistan Freelancer & Sole Proprietor — Income Tax Return (IRIS, §114)

Establish the taxpayer's identity, confirm Pakistani residency under ITO 2001 §82 (183-day rule), verify Active Taxpayer List (ATL) status on IRIS, and determine whether the income is purely business/professional (non-salary brackets apply) or mixed with salary income (75% test under First Schedule). Also identify whether any income qualifies for the §154A IT-export final-tax regime.

Collect all sources of gross income for the tax year: domestic service fees, foreign client receipts, rental income, bank profit, prize bonds, and any other sources. Classify each stream — in particular, segregate IT/ITeS export receipts eligible for §154A final tax (requires active PSEB registration and e-PRC from the bank) from domestic services income taxed under the non-salary brackets. Obtain all withholding certificates and CPRs.

Identify and document allowable deductions under ITO 2001 §§20–28 against business income: rent, utilities, staff salaries, depreciation (Third Schedule rates), professional fees, internet, and travel with a business nexus. Apportion mixed expenses between export and domestic income where the §154A final-tax regime applies. Compute taxable business income and check whether the §113 minimum tax on turnover (1.25% of gross receipts) applies.

Apply the non-salary income tax brackets (First Schedule, Part I, Division I) to taxable business income. Apply the 10% surcharge if taxable income exceeds PKR 10,000,000. Compute available tax credits under §61 (charitable donations to approved institutions), §62 (listed-company shares/sukuk), and §63 (voluntary pension scheme contributions). Deduct creditable withholding taxes (§153, §151, §155, §236-series CPRs) and compute the net tax payable or refundable.

Prepare the mandatory §116 wealth statement reconciling opening and closing net assets for the tax year. Every asset acquired, liability discharged, and personal expenditure must be reconciled against declared income. Unexplained increases in net wealth risk reclassification as taxable income under §111. This step is mandatory for all resident individual filers regardless of income level.

File the annual income tax return on the IRIS portal (iris.fbr.gov.pk) using Form 114(1) for individuals, attaching the wealth statement and all supporting schedules. Generate the CPR for any balance tax due and pay via authorised bank or online. If latest assessed taxable income exceeds the §147 threshold (PKR 1,000,000), compute and schedule the four quarterly advance-tax instalments for the coming year (due 15 September, 15 December, 15 March, and 15 June).