Section 154B of the Income Tax Ordinance, 2001 requires banks and financial institutions to deduct tax on social media revenues, with different treatment for resident and non-resident recipients.

ISLAMABAD: The Federal Board of Revenue (FBR) has outlined the income tax mechanism for earnings received from social media platforms during Tax Year 2027 under Section 154B of the Income Tax Ordinance, 2001.

The FBR issued the ordinance updated up to June 30, 2026, covering the period from July 1, 2026, to June 30, 2027. Section 154B provides for withholding tax on revenues received by individuals and entities through digital platforms.

Under the provision, every banking and non-banking financial institution must deduct tax when an amount representing social media revenue is credited to or received in a person’s account. The applicable rate is specified in Division IIIAB of Part III of the First Schedule to the ordinance.

The section defines a digital content creator or social media influencer as an individual or entity earning income through the creation, publication or monetisation of content on platforms including YouTube, Facebook, Instagram and TikTok.

The definition of payment covers inward remittances, transfers and credits received through banking channels. It also includes payments processed through intermediaries such as online payment service providers and digital financial platforms.

Section 154B distinguishes between resident and non-resident recipients. Tax deducted from a resident person is treated as minimum tax, while tax deducted from a non-resident person without a permanent establishment in Pakistan constitutes final tax.

The provision also authorises the FBR to prescribe implementation rules through an official Gazette notification, including mechanisms for identifying recipients and reporting social media revenues.

The applicable withholding tax rate is specified in the First Schedule and should be checked against the relevant provisions for Tax Year 2027.