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Zakat On Earnings From Freelancing Work
Aoa, I want to know how much percentage of zakat is on freelancing.
Things to consider:1. It is a service that you provide to others. It could be making a website for a business or a mobile app
2. There is time, energy, expertise, intellect involved in this
3. There is also monetary investment in equipment such as computer, electricity, and internet. As for the equipment which is the computer, one doesn’t have to upgrade it very often, mostly it is one time investment.
4. There is no tax taken as of now by Pakistani government from freelancers so freelancers get to keep the full amount of income
Please tell me the percentage of zakat I need to pay when I complete a project and receive income from it.
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6 Replies
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Zakat On Earnings From Freelancing Work
updated 1 year, 1 month ago
3 Members
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6
Replies
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Computers, Internet, and electricity are not considered as investments. Instead, they are considered as business expenses. Unless any work is conducted as a proper business with initial / ongoing investment, Zakat is calculated at 10% of the production.
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An exception regarding computer equipment can be when specialized equipment is purchased for business. Also if you dedicate some of your personal equipment for business and that point forward there is no or minimal personal use of such equipment. These cases will be considered as investments if you run freelancing as a proper business.
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Okay, thanks!
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Please also note that there is no absolute tax exemption for freelancing work in Pakistan. 100% tax credit is available for startups for the first three years (subject to some conditions). After that, export proceeds from I.T services are subject to 0.25% of deduction at source by the banks till tax year 2026.
You are advised to kindly consult a professional in this regard.
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So, banks automatically take that tax when I receive money from abraod?
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This is not an appropriate question for this platform. It is better to seek professional advice.
To get some idea, you can refer to Sections 65F and 154A of the Income Tax Ordinance, 2001. And for the rate of deduction, please see Division IVA of Part III of the First Schedule of the Income Tax Ordinance, 2001.
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