Taxation on IT Export and Services for Tax year 2022-2023

After the finance bill 2022, following taxation will be implemented on IT Export Services. (W.e.f 1st July 2022)

 0.25% on Export proceeds of Computer software or IT services or IT Enabled services by persons registered with Pakistan Software Export Board and 

1% on any other case   

Above rates will be consider final (FTR*: Final Tax Regime) if following conditions meet:

(a) return has been filed; 

(b) withholding tax statements for the relevant tax year have been filed; and

 c) sales tax returns under Federal or Provincial laws have been filed, if required under the law; 

(d) no credit for foreign taxes paid shall be allowed.

Reference of Law: Section 154A(2) of ITO, 2001   

If the above conditions are not met then all the income falls under NTR (Normal Tax Regime). Normal Business Income Tax rates applicable which is upto 35% on progressive basis. 

*Final Tax Regime means whatever the amount falls under this regime exempt from any further taxation. Advance Tax deducted at time of payment, consider full and final. In case of IT Companies which are registered with PSEB (Pakistan Software Export Board) is 0.25% and those un-registered with PSEB is 1%.