The federal government has imposed tax on income earned through social media platforms for the first time in Budget 2026-27, bringing digital content creators and influencers under a new tax framework.
According to the Federal Board of Revenue, a 5% withholding tax will be deducted from income generated through major social media platforms.
Under the new budget proposal, individuals earning income from YouTube, Instagram, Facebook and TikTok will have to pay 5% withholding tax.
The measure marks the first time that income generated through social media platforms has been formally brought under the tax net in the federal budget.
New tax system for content creators
A new tax system has been introduced for digital content creators and social media influencers.
The move is aimed at documenting income earned through online platforms and expanding the tax base as digital earnings continue to grow in Pakistan.
Banks to deduct tax
According to the FBR, banks and financial institutions will be authorized to deduct withholding tax on social media income.
This means tax may be deducted at the financial transaction level when payments from social media platforms are received through banking channels.
Federal budget size fixed at Rs18.77tr
According to the budget document, the size of the federal budget for the upcoming fiscal year has been set at Rs18,771 billion. The Federal Board of Revenue’s annual tax target has been fixed at Rs15,264 billion.
Gross revenue has been estimated at Rs20,600 billion, while non-tax revenue is projected at Rs5,336 billion.
The budget document shows that Rs8,848 billion will be transferred to the provinces in the next fiscal year. After provincial transfers, the federal government’s net revenue is estimated at Rs11,751 billion.
The government plans to borrow Rs2,034 billion from internal sources and Rs813 billion from external sources. It will also obtain Rs4,012 billion through T-bills, Pakistan Investment Bonds and Sukuk.
In addition, Rs161 billion is expected to be generated through the privatization of government institutions during the next fiscal year.
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