FBR’s new Section 154B requires financial institutions to deduct 5% tax from social media earnings received by digital content creators and influencers.
The Federal Board of Revenue (FBR) has introduced a 5% withholding tax on income earned from social media platforms, bringing digital content creators and social media influencers under a new tax mechanism effective from July 1, 2026.
According to an income tax circular issued by the FBR, a new Section 154B has been added to the tax framework to govern the deduction of tax on social media-related earnings.
Under the new provision, banks and non-banking financial institutions will be required to deduct tax when payments related to social media revenue are credited to or received in an individual’s account.
The tax will be deducted at the rate specified under Division IIIAB of Part III of the First Schedule, which has been set at 5%.
Who will be affected?
The measure applies to income received from social media platforms by individuals who fall within the definitions of digital content creators or social media influencers.
The FBR has also defined the term “payment” for the purposes of Section 154B, establishing the point at which the withholding mechanism applies when social media-related income reaches an individual through a financial institution.
For resident taxpayers, the 5% withholding tax will be treated as minimum tax.
For non-resident individuals who do not have a permanent establishment in Pakistan, the same deduction will be treated as final tax.
The FBR has also introduced a consequential amendment to Section 169 to align the tax treatment with the new withholding provision.
The move expands Pakistan’s tax framework into the country’s growing digital creator economy, placing social media earnings within a formal tax collection mechanism.
The new provision covers individuals earning income through social media platforms, including digital content creators and influencers, with financial institutions playing a key role in collecting the tax at the payment stage.
The measure takes effect from July 1, 2026, marking a new phase in the taxation of digital income in Pakistan.
About The Author
