Receiving a formal notice from the Federal Board of Revenue (FBR) can be a concerning experience for any taxpayer. If you have submitted your Income Tax Return for Tax Year 2022, 2023, 2024, or 2025, it is essential to check your FBR taxpayer profile regularly.
FBR tax notices should never be taken lightly, regardless of how minor they may initially appear. Ignoring an initial notice can lead to consecutive reminders, followed by an official order passed against you. Once an order is finalized, the FBR issues a final recovery notice and retains the authority to deduct the assessed tax amount directly from your bank account.
This guide provides a comprehensive breakdown of why FBR issues notices under Section 122(9), specifically regarding foreign freelancing income claims, and outlines the exact procedure required to respond effectively.
What Is an FBR Section 122(9) Notice?
An FBR notice under Section 122(9) is an assessment-related notice issued when the tax department raises an objection regarding the details disclosed in your filed Income Tax Return.
In a recent case involving Tax Year 2023, the FBR issued a Section 122(9) notice challenging a taxpayer’s claimed foreign freelancing income, alleging that the declared amount was not tax-exempt.
Upon issuing a Section 122(9) notice, the FBR provides two choices:
- Revise the Income Tax Return to correct the specified amount.
- Submit documentary evidence to prove that the figures declared in the return are accurate and legally justified.
Even if a taxpayer files their return accurately according to their records, the FBR maintains the legal right to question any declared figure and demand documentary proof.
Why FBR Questions Foreign Freelancing Income
Freelancers and self-filers often declare foreign source income or tax exemptions based on general online knowledge. However, the FBR requires strict verification for all declared amounts.
Tax regulations applicable to freelancers specify the following tax treatments based on registration status:
- 0.25% Tax Rate: Applicable to freelancers registered with the Pakistan Software Export Board (PSEB) / (PSCB).
- 1.00% Tax Rate: Applicable to non-registered freelancers.
When the FBR flags a foreign income claim as non-exempt, the burden of proof rests entirely on the taxpayer to demonstrate that the funds represent genuine foreign freelancing earnings.
Documents Required to Prove Foreign Earnings
If you are a freelancer who has received a Section 122(9) notice regarding declared foreign earnings, you must assemble a complete chain of financial documentation.
To build a valid response, gather the following documents for the relevant tax year:
- Platform Earnings Statements: Complete annual account statements from platforms where client projects were obtained (e.g., Fiverr or Upwork).
- Intermediate Payment Statements: Complete account statements from payment processing services used to receive international funds (e.g., Payoneer or PayPal).
- Local Bank Account Statements: Full bank statements of your Pakistani bank account showing the corresponding inward remittances.
Crucial Step: Financial Reconciliation
Before submitting your documents, reconcile all figures carefully. The total amounts shown across your platform statements (Fiverr/Upwork), payment gateway records (Payoneer/PayPal), local bank statements, the filed tax return, and the FBR notice must match precisely.
How to Submit a Response to Section 122(9) Notice
A complete and effective response involves both digital submission and physical compliance:
- Prepare Digital PDF Copies: Convert all reconciled statements (platform, payment gateway, and local bank statement) into PDF format.
- File Online via FBR Portal: Upload all PDF evidence through the official FBR online portal in response to the notice.
- Draft a Written Statement: Attach a formal written response declaring that the highlighted earnings represent genuine foreign freelancing income from foreign clients, with no local salary or domestic work involved.
- Submit a Physical Copy: For added safety, compile a complete physical file containing all documentary proof and submit it directly to the office of the relevant Tax Commissioner.
Frequently Asked Questions
Q1: What happens if I ignore an FBR Section 122(9) notice? Answer: If ignored, the FBR will issue reminders and may eventually pass an assessment order against you. Following the order, a final recovery notice will be issued, allowing the FBR to auto-deduct the tax amount directly from your bank account.
Q2: Which tax years require profile checking for potential notices? Answer: Taxpayers who have filed Income Tax Returns for Tax Year 2022, 2023, 2024, or 2025 should check their FBR profiles for any pending notices.
Q3: What are the tax rates for freelancers in Pakistan according to the transcript? Answer: Freelancers registered with PSCB (PSEB) are subject to a 0.25% tax rate, while non-registered freelancers are subject to a 1% tax rate.
Q4: Which payment gateway statements should be attached when replying to a notice regarding freelancing income? Answer: You should attach statements from freelancing platforms (such as Fiverr or Upwork), international payment services (such as Payoneer or PayPal), and your local Pakistani bank account statement.
Q5: Should the response to a Section 122(9) notice be submitted online or physically? Answer: It is recommended to submit the response along with PDF evidence on the online FBR portal, as well as submit a complete physical file to the relevant Tax Commissioner’s office.
Conclusion
An FBR Section 122(9) notice requires immediate attention and accurate compliance. By maintaining complete financial records—including freelancing platform statements, international payment processing logs, and local bank statements—taxpayers can successfully prove their foreign freelancing income, resolve FBR objections, and protect their accounts from recovery orders.
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