How to Report Crypto Income in Pakistan: A Step-by-Step Guide (2023)

Understanding Cryptocurrency Taxation in Pakistan

As cryptocurrency adoption grows in Pakistan, the Federal Board of Revenue (FBR) has increased scrutiny on crypto-related income. While Pakistan lacks specific crypto tax laws, all earnings – including digital assets – fall under the Income Tax Ordinance 2001. This guide explains how to legally report crypto profits and avoid penalties.

Is Cryptocurrency Legal in Pakistan?

Pakistan’s crypto landscape remains in a regulatory gray area:

• 🚫 Not legal tender: The State Bank prohibits crypto use for payments
• ⚠️ No outright ban: Citizens can legally buy/hold cryptocurrencies
• 📈 Taxable income: All crypto gains must be declared as “other income”

How to Report Crypto Income: 4 Essential Steps

Step 1: Calculate Taxable Income

• Trading profits: (Sell price – Buy price) x Quantity
• Mining income: Market value at receipt
• Staking rewards: Value when tokens become spendable

Step 2: Gather Required Documents

• 🔗 Complete transaction history from exchanges
• 🏦 Bank statements showing crypto-related transfers
• 📄 Wallet addresses and ownership proof
• 💱 Exchange KYC documents

Step 3: File Your Tax Return

1. Use Form ITR-1 for individuals
2. Declare crypto income under “Other Income”
3. Convert values to PKR using SBP’s exchange rate

Step 4: Pay Applicable Taxes

• 📈 Capital Gains: 15% if held <1 year
• 💼 Business Income: Progressive rates up to 35%
• ⚒️ Mining Income: Taxed as business profit

Crypto Tax FAQ: Pakistan Edition

Q1: Can I file crypto taxes myself?

While possible, most traders use tax professionals due to complex calculations and regulatory uncertainty.

Q2: What if I used international exchanges?

All global crypto income must be reported. Maintain USD-to-PKR conversion records.

Q3: Are NFT sales taxable?

Yes – treat as capital assets. Profit from NFT flipping is taxable income.

Q4: Can I deduct crypto losses?

Capital losses can offset gains, but not regular income. Requires proper documentation.

Q5: What penalties apply for non-compliance?

Up to 25% penalty + 1% monthly interest on unpaid tax. Severe cases may face criminal charges.

Staying Compliant in 2023

With Pakistan considering formal crypto regulations, proper tax reporting is crucial. Maintain detailed records of all transactions and consult a chartered accountant familiar with digital assets. The FBR accepts electronic records, so use crypto tax software like Koinly or CoinTracker to simplify reporting.