How to Report Airdrop Income in Pakistan: Your Complete Tax Guide

Understanding Airdrop Income Taxation in Pakistan

With the rise of cryptocurrency, airdrops have become a popular way for blockchain projects to distribute free tokens to wallet holders. In Pakistan, the Federal Board of Revenue (FBR) considers airdropped cryptocurrencies as taxable income under the Income Tax Ordinance 2001. Whether you received tokens through promotional campaigns, forks, or community rewards, you must declare this income when it’s converted to fiat currency (like PKR) or used to purchase goods/services. Failure to report can lead to penalties of up to 100% of the tax due plus legal consequences.

Step-by-Step Guide to Reporting Airdrop Income

1. Track Your Airdrop Details: Record the date received, token name, quantity, and fair market value in PKR at receipt time.
2. Calculate Taxable Value: Use the PKR value at the time of disposal (sale/trade) minus the original value to determine capital gains. If held under 12 months, it’s added to ordinary income.
3. File Through Iris Portal: Log into FBR’s Iris tax portal, select “Capital Gains” under the income section, and enter details in Schedule G.
4. Pay Applicable Taxes: For individuals, progressive tax rates apply (0-35%). Companies pay 29% flat rate plus super tax if applicable.
5. Retain Proof: Keep exchange records, wallet addresses, and valuation screenshots for 6 years.

Essential Documents for Airdrop Tax Filing

• Cryptocurrency exchange transaction history showing disposal
• Blockchain wallet addresses with receipt timestamps
• Fair market value proofs (screenshots from CoinGecko, Binance, or local exchanges)
• Bank statements reflecting PKR conversions
• CNIC copy and NTN certificate

Common Reporting Mistakes to Avoid

• Ignoring small airdrops – all income must be reported regardless of amount
• Using USD values without converting to PKR at State Bank rates
• Missing disposal events when swapping tokens or paying with crypto
• Failing to account for transaction fees in gain/loss calculations
• Not declaring airdrops received before tax residency in Pakistan

Frequently Asked Questions (FAQs)

Is unsold airdropped crypto taxable in Pakistan?

No – taxation triggers only when you sell, trade, or spend the tokens. Unrealized gains aren’t taxed.

What if I received airdrops worth less than PKR 500?

All crypto income must be reported regardless of amount. Pakistan has no minimum threshold for cryptocurrency earnings.

How do I value airdropped tokens with no market price?

Use the value of similar assets or the project’s token sale price. Document your valuation method for FBR scrutiny.

Can I offset airdrop losses against other income?

Yes – capital losses from crypto can be carried forward for up to 6 years to offset future capital gains.

Do decentralized exchanges (DEX) transactions need reporting?

Absolutely. All disposals must be reported, even peer-to-peer or DEX trades. Use transaction hash IDs as proof.

What penalties apply for late airdrop income reporting?

Late filers face 0.1% daily penalty (max 100% of tax due) plus PKR 10,000/month fine under Section 182 of Income Tax Ordinance.

Always consult a FBR-registered tax advisor for complex cases. Stay compliant to avoid audits and leverage Pakistan’s growing crypto ecosystem confidently.