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Frequently Asked Questions

Source-verified answers to real questions IT professionals ask about Pakistan regulations.

Tax & WHT 34
Short answer: 0.25% (PSEB) or 1% (non-PSEB) WHT on IT exports
PSEB-registered IT exporters pay 0.25% WHT (final tax) under ITO 2001 Section 154. Non-PSEB exporters pay 1% under Section 153.
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ITO 2001 Section 154 download1.fbr.gov.pk ICT (Islamabad) IT Compliance — Complete Guide Tax & Finance — Complete IT Company Guide
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Short answer: 20% corporate tax rate
20% for tax year 2025 per Finance Act 2025, Section 4.
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Finance Act 2025 Section 4 download1.fbr.gov.pk Tax & Finance — Complete IT Company Guide
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Short answer: September 30 annually
September 30 each year. Late filing penalty is PKR 40,000 plus 0.1% per day under ITO 2001.
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ITO 2001 download1.fbr.gov.pk Tax & Finance — Complete IT Company Guide Annual Compliance Calendar — Complete IT Company Guide
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Short answer: 0% (PSEB) or 15% standard in Sindh
15% standard rate, but PSEB-registered IT/ITeS exporters pay 0% per SRO 981(I)/2015 under the Sindh Sales Tax on Services Act 2011.
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SRO 981(I)/2015 srb.gos.pk Sindh IT Compliance — Complete Guide
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Short answer: Register online at srb.gos.pk with NTN and PSEB certificate
Register online at srb.gos.pk with your NTN, SECP incorporation, and PSEB certificate. IT exporters with PSEB pay 0%.
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SST Act 2011 srb.gos.pk Sindh IT Compliance — Complete Guide
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Short answer: 0% (PSEB) or 16% standard in Punjab
16% standard rate, but PSEB-registered IT/ITeS exporters pay 0% per SRO 981(I)/2015 under the Punjab Sales Tax on Services Act 2012.
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SRO 981(I)/2015 srb.gos.pk Punjab IT Compliance — Complete Guide
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Short answer: 0% (PSEB) or 15% standard in KP
15% standard rate, but PSEB-registered IT/ITeS exporters pay 0% per SRO 981(I)/2015 under KPRA jurisdiction.
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SRO 981(I)/2015 srb.gos.pk KP IT Compliance — Complete Guide
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Short answer: 0% (PSEB) or 15% standard in Balochistan
15% standard rate, but PSEB-registered IT/ITeS exporters pay 0% per SRO 981(I)/2015 under BRA jurisdiction.
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SRO 981(I)/2015 srb.gos.pk Balochistan IT Compliance — Complete Guide
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Short answer: 0.25%/1% WHT + 20% corporate tax (no SST)
Federal taxes apply: 0.25% WHT (PSEB) or 1% (non-PSEB) on export income under ITO 2001 Section 154, plus 20% corporate tax. No provincial SST.
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ITO 2001 Section 154 download1.fbr.gov.pk ICT (Islamabad) IT Compliance — Complete Guide
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Short answer: 0% with PSEB registration, 15% without
IT and IT-enabled services (ITeS) are zero-rated (0%) for PSEB-registered companies in Sindh under Sindh Sales Tax Act 2011. The standard rate is 15% (19.5% for telecom/hosting), but PSEB-registered IT companies pay 0%. You must register with SRB on e.srb.gos.pk and file quarterly returns showing 0% IT services. Software development, IT consulting, call centers, BPO, data processing, and cloud services all qualify for zero-rating.
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SRO 981(I)/2015; Sindh Sales Tax Act 2011 srb.gos.pk SRB — Sindh Revenue Board SRB — Sindh Revenue Board Tax Procedures
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Short answer: 0% with PSEB registration, 16% without
IT and ITeS services are zero-rated (0%) for PSEB-registered companies in Punjab under Punjab Sales Tax on Services Act 2012. The standard rate is 16%, but PSEB-registered IT companies pay 0%. Register with PRA on epra.punjab.gov.pk. Same applies to KP (15% standard, 0% IT) and Balochistan (15% standard, 0% IT).
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SRO 981(I)/2015; PSTS Act 2012 pra.punjab.gov.pk PRA — Punjab Revenue Authority PRA — Punjab Revenue Authority Procedures
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Short answer: SRO 981(I)/2015 — available on fbr.gov.pk
SRO 981(I)/2015 issued by the Federal Board of Revenue is the key notification that zero-rates IT and ITeS services from federal sales tax across all provinces. Each province has its own implementing notification: Sindh under SST Act 2011, Punjab under PSTS Act 2012, KP under KPRA Act, and Balochistan under BRA Act. The SRO specifically covers software development, IT consulting, call centers, BPO, data processing, and cloud services when the company is PSEB-registered.
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SRO 981(I)/2015 www.fbr.gov.pk FBR — Federal Board of Revenue SRB — Sindh Revenue Board PRA — Punjab Revenue Authority KPRA — Khyber Pakhtunkhwa Revenue Authority BRA — Balochistan Revenue Authority SRB — Sindh Revenue Board Tax Procedures PRA — Punjab Revenue Authority Procedures KPRA — Khyber Pakhtunkhwa Revenue Authority
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Short answer: 0.25% for PSEB-registered, 1% for non-PSEB — Section 154/152A, ITO 2001
The withholding tax on IT export proceeds is 0.25% for PSEB-registered companies and 1% for non-PSEB registered entities. This is governed by Section 154 of the Income Tax Ordinance 2001 (as amended by Finance Acts). The 0.25% rate is a final tax — meaning no further tax liability on this income. PSEB registration is mandatory to claim the reduced rate. The receiving bank deducts this at source when crediting export proceeds. The relevant provision is in ITO 2001 Section 154 read with Clause 133 of the Second Schedule (which was withdrawn by Finance Act 2024, but the reduced rates under Section 152A still apply for PSEB-registered exporters).
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Section 154, 152A ITO 2001; Finance Act 2024-25 fbr.gov.pk iris.fbr.gov.pk FBR — Federal Board of Revenue Income Tax Guide for IT Exports Export to Foreign Clients — Complete Guide
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Short answer: Yes, with PSEB freelancer registration (Rs 5,000) — same 0.25% rate applies
Yes, freelancers can get the 0.25% rate if they register with PSEB as individual freelancers (registration fee Rs 5,000). Without PSEB registration, the rate is 1%. The Finance Act provisions apply equally to companies and individuals. PSEB freelancer registration requires: valid CNIC, bank statement, and proof of IT skills/certifications. Register at pseb.org.pk or techdestination.com. Once registered, you present your PSEB certificate to the bank receiving your export proceeds.
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Section 152A ITO 2001 techdestination.com PSEB — Pakistan Software Export Board Freelancer Compliance Guide
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Short answer: Gradually reduced to 0.25%. Note: old 100% exemption (Clause 133) was WITHDRAWN by Finance Act 2024
The reduced 0.25% rate for PSEB-registered IT exporters was introduced through the Finance Act over successive years, settling at 0.25% as a final tax on export proceeds. Before this reduction, the rate was 1%. The key changes: (1) SRO 981(I)/2015 established the zero-rating of sales tax on IT services; (2) Section 154/152A of ITO 2001 provides the reduced WHT rate; (3) Clause 133 of the Second Schedule (which gave 100% exemption) was WITHDRAWN by Finance Act 2024 — this is critical: the old 100% exemption no longer applies, so the current effective rate is 0.25% (PSEB) or 1% (non-PSEB) as a final tax, not zero.
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Finance Act 2024; ITO 2001 Section 154 www.fbr.gov.pk FBR — Federal Board of Revenue Income Tax Guide for IT Exports
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Short answer: 29% corporate rate, but IT exporters pay only 0.25% WHT (final tax) on export proceeds
The corporate tax rate is 29% for Tax Year 2025-26 (as per Finance Act 2025). Super Tax applies at 0-10% based on income brackets (Section 4C). Minimum tax on turnover is 1.25% (Section 113). For IT export companies, the effective rate is much lower because WHT at 0.25% (PSEB-registered) or 1% (non-PSEB) is a FINAL tax on export proceeds — meaning no further tax liability on that income.
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Finance Act 2025; ITO 2001 Section 154 www.fbr.gov.pk FBR — Federal Board of Revenue Income Tax Guide for IT Exports Withholding Tax Complete Guide
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Short answer: Minimum Rs 40,000 + loss of ATL status (double WHT rates apply). Prosecution possible.
For corporate non-filing, the minimum penalty is Rs 40,000 under Section 182 of ITO 2001. Additional consequences: (1) You lose ATL (Active Taxpayer List) status, which means higher WHT rates apply to all your transactions; (2) Under Section 182A, non-ATL persons are subject to double the normal WHT rates; (3) Prosecution under Section 192 for willful default; (4) The FBR can freeze bank accounts and attach property under Section 140. For timely filing, the deadline is September 30 for the tax year ending June 30.
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Section 182, 182A ITO 2001 www.fbr.gov.pk FBR — Federal Board of Revenue Withholding Tax Complete Guide
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Short answer: Yes. PSEB-registered: 0.25% final tax on exports. Non-PSEB: 1% WHT. Domestic income: normal tax slabs.
Yes, freelancing income is taxable in Pakistan. If you are PSEB-registered, your IT export income is subject to 0.25% WHT as a final tax under Section 152A of ITO 2001. Without PSEB registration, the rate is 1%. If your freelancing income is from domestic clients, normal income tax slabs apply. You must file an annual tax return by September 30. The tax year runs July-June. Key: PSEB registration converts your export income to a low final tax rate instead of progressive slab rates.
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Section 152A ITO 2001 www.fbr.gov.pk FBR — Federal Board of Revenue Freelancer Compliance Guide
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Short answer: 0.25% = PSEB-registered (final tax). 1% = non-PSEB (final tax). Both final — no further tax. Savings: $750 per $100K.
The 0.25% WHT rate is for PSEB-registered IT exporters under Section 154 of ITO 2001. The 1% rate applies to non-PSEB registered IT exporters under Section 152A. Both are FINAL tax rates — meaning no further income tax is payable on these export proceeds. To get the 0.25% rate: Register with PSEB (Rs 10,000 for companies), present PSEB certificate to your receiving bank, and the bank will deduct 0.25% instead of 1%. Without PSEB registration, your bank will deduct 1%. The savings on a $100,000 export: PSEB = $250, Non-PSEB = $1,000 — that's $750 more in your pocket per $100K.
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Section 154, 152A ITO 2001 techdestination.com FBR — Federal Board of Revenue PSEB — Pakistan Software Export Board Income Tax Guide for IT Exports
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Short answer: Social media tax applies to content creators, not standard IT exporters
Section 99C of ITO 2001 (inserted by SRO 545/546(I)/2026, effective April 1, 2026) imposes withholding tax on persons earning income from remunerative social media content. It applies to non-resident creators whose content is consumed by 50,000+ Pakistani users/year (or 12,250/quarter). The RPM rate is Rs. 195 per 1,000 YouTube views. Standard IT companies that do not produce social media content for Pakistani audiences are NOT directly affected, but they should be aware of the Rule 19M/19N calculation methodology if they have content creator employees.
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SRO 545(I)/2026; SRO 546(I)/2026; Section 99C ITO 2001 fbr.gov.pk download1.fbr.gov.pk FBR — Federal Board of Revenue PSEB — Pakistan Software Export Board
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Short answer: September 30 for companies (June year-end); check IRIS for extensions
FBR corporate tax return filing deadline is typically September 30 for companies with a June 30 year-end (Tax Year 2025 return due by Sept 30, 2025 for TY2024). The deadline is extended periodically via FBR circulars. Late filing triggers penalties under Section 182 (Rs. 1,000/day for individuals, higher for companies) and Section 182A (additional penalties). Check IRIS (iris.fbr.gov.pk) for the current year's specific deadlines.
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Section 182, 182A ITO 2001; FBR Circulars fbr.gov.pk iris.fbr.gov.pk PSEB — Pakistan Software Export Board
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Short answer: PSEB-registered IT exporters file at 0%; domestic IT services must register provincially
Federal sales tax on services is handled by provinces. IT/ITeS exporters who are PSEB-registered and filing ST with their provincial revenue authority (SRB, PRA, etc.) at 0% do not need additional federal sales tax registration. However, if they provide domestic services, they must register with the relevant provincial revenue board (SRB for Sindh, PRA for Punjab, KPRA for KP, BRA for Balochistan). The 0% rate applies only to PSEB-registered exporters filing proper returns.
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SRO 981(I)/2015; Provincial Sales Tax Acts srb.gos.pk pra.punjab.gov.pk pseb.org.pk FBR — Federal Board of Revenue SECP — Securities and Exchange Commission of Pakistan SRB — Sindh Revenue Board PRA — Punjab Revenue Authority KPRA — Khyber Pakhtunkhwa Revenue Authority BRA — Balochistan Revenue Authority
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Short answer: PSEB-registered IT exporters get 0.25% WHT on remittances under Section 152A
Under Finance Act 2022 and subsequent amendments, IT companies with PSEB registration and exports exceeding 80% of revenue can opt for a reduced tax framework. The standard corporate tax rate applies but with specific adjustments for IT exporters. PSEB-registered companies exporting IT services benefit from the 0.25% withholding tax under Section 152A ITO 2001 on export remittances. Companies must maintain PSEB registration, file monthly withholding statements, and ensure export proceeds are remitted through banking channels.
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Section 152A ITO 2001; Finance Act 2022, 2025; PSEB Registration Rules fbr.gov.pk pseb.org.pk download1.fbr.gov.pk MoITT — Ministry of IT & Telecom PSEB — Pakistan Software Export Board Withholding Tax Complete Guide
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Short answer: 0.25% export WHT (PSEB); 1% without PSEB; 8.5% domestic services
Key WHT rates for IT/ITeS: (1) Export remittances — 0.25% with PSEB registration (Section 152A), otherwise 1% (Section 154); (2) Domestic IT services — 8.5% on services for companies, 10% for non-filer companies; (3) Contractor payments — 7% (filer) / 12.5% (non-filer) under Section 153; (4) Salary — varies by slab under Section 12; (5) Non-resident IT services — 15% under Section 152 unless treaty relief applies.
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Section 152A, 154, 153, 152 ITO 2001; Finance Act 2025 fbr.gov.pk download1.fbr.gov.pk MoITT — Ministry of IT & Telecom PSEB — Pakistan Software Export Board
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Short answer: File returns to stay on ATL; non-filers pay 2-3x higher WHT rates
The ATL is maintained by FBR of persons who have filed their tax returns. Filer vs non-filer status significantly impacts WHT rates — non-filers pay 2-3x higher rates. Being on the ATL (filing returns) means lower WHT on banking transactions, property deals, vehicle purchases, and services. The ATL is updated weekly; last updated April 4, 2026. Check your status at iris.fbr.gov.pk or e.fbr.gov.pk/ATL. IT companies must ensure they and their employees are on the ATL to avoid higher WHT deductions.
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Section 182 ITO 2001; FBR ATL Notifications; Finance Act 2025 fbr.gov.pk e.fbr.gov.pk PSEB — Pakistan Software Export Board
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Short answer: One return for all provinces; file through your provincial revenue board portal
Pakistan has implemented a Single Sales Tax Return system allowing businesses to file one return for all provinces. SRB is participating in this national unified filing system. This simplifies compliance for IT companies operating in multiple provinces — instead of filing separate returns with SRB, PRA, KPRA, and BRA, you file one return. The system is accessible through provincial revenue board portals (e.srb.gos.pk for Sindh, epra.punjab.gov.pk for Punjab).
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Single Sales Tax Return Framework; Provincial Revenue Board Circulars srb.gos.pk pra.punjab.gov.pk SRB — Sindh Revenue Board PRA — Punjab Revenue Authority
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Short answer: Sindh: Rs. 5M; Punjab: Rs. 10M; but register anyway for 0% IT rate
In Sindh, registration is mandatory if annual turnover exceeds Rs. 5 million (per Sindh Sales Tax Act 2011). In Punjab, the threshold is Rs. 10 million (PSTS Act 2012). For federal sales tax on goods, the threshold is Rs. 5 million. IT/ITeS companies should register regardless of threshold to claim 0% rate with PSEB registration — operating without registration while providing services is a violation, even if the rate is 0%.
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Sindh Sales Tax Act 2011 Section 3; PSTS Act 2012 srb.gos.pk pra.punjab.gov.pk SRB — Sindh Revenue Board PRA — Punjab Revenue Authority
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Short answer: Yes, claim input tax adjustment in quarterly returns under Sections 18-21 SST Act 2011
Yes. Under provincial sales tax laws, PSEB-registered IT companies filing at 0% can claim input tax adjustment for services/goods purchased (like rent, utilities, internet). The adjustment is claimed in the quarterly return filed with the provincial revenue board. However, if output tax is 0%, the input tax credit accumulates as a refund or adjustment against future liabilities. In Sindh, this is governed by Sections 18-21 of the Sindh Sales Tax Act 2011.
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Sindh Sales Tax Act 2011 Sections 18-21; PSTS Act 2012 srb.gos.pk e.srb.gos.pk SRB — Sindh Revenue Board
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Short answer: File returns and withholding statements at iris.fbr.gov.pk; maintain ATL status
IRIS (iris.fbr.gov.pk) is FBR's online portal for income tax return filing, withholding statements, and compliance. IT companies must: (1) Register on IRIS with NTN/CNIC; (2) File annual income tax returns by the deadline (typically Sept 30 for TY24); (3) File monthly withholding tax statements (Section 165); (4) Maintain ATL status. The system handles corporate returns, individual returns, and withholding statements. FBR also offers TaxRay, an AI-based information portal for taxpayer queries.
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ITO 2001 Section 114 (Return); Section 165 (Withholding Statement); FBR IRIS Guidelines iris.fbr.gov.pk fbr.gov.pk PSEB — Pakistan Software Export Board
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Short answer: Freelancers: 7% WHT (filer); Employees: salary tax + EOBI + social security
Freelancers (independent contractors): WHT at 7% (filer) or 12.5% (non-filer) under Section 153 ITO 2001. The IT company deducts this and deposits with FBR. Freelancers must file their own returns. Employees (salary): WHT deducted by employer under Section 12 ITO 2001 (salary tax rates), EOBI contribution (6% employer + 1% employee of minimum wages), and social security (7% of wages, employer-paid in most provinces). PSEB-registered companies should ensure freelancers are on ATL to avoid higher WHT.
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Section 153, 12 ITO 2001; EOBI Act 1976; Provincial Social Security Acts fbr.gov.pk eobi.gov.pk PSEB — Pakistan Software Export Board SESSI — Sindh Employees Social Security Institution Federal Labor Laws for IT Companies
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Short answer: Only applies to income > Rs. 150M (progressive 1-10%); most IT companies exempt
Super tax (Section 4C ITO 2001, inserted by Finance Act 2022) applies to high-income persons and entities. For Tax Year 2025, it's a progressive surcharge: 1% on income Rs. 150M-200M, 2% on Rs. 200M-250M, 3% on Rs. 250M-300M, 4% on Rs. 300M-350M, 6% on Rs. 350M-400M, 8% on Rs. 400M-500M, 10% on Rs. 500M+. Most IT companies are below these thresholds and are NOT subject to super tax. However, large IT companies earning over Rs. 150M must calculate and pay super tax.
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Section 4C ITO 2001; Finance Act 2022, 2025 fbr.gov.pk download1.fbr.gov.pk PSEB — Pakistan Software Export Board
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Short answer: PSEB-registered exporters: export revenue excluded from MAT; domestic providers: 1.25% of turnover
Minimum Alternate Tax under Section 113C ITO 2001 applies to companies whose tax payable is less than 1.25% of turnover. For IT exporters with PSEB registration, export revenue is excluded from the turnover calculation for MAT purposes under Finance Act provisions. This means PSEB-registered IT exporters whose primary income is from exports may have significantly reduced or zero MAT liability. Domestic IT service providers are still subject to MAT on their total turnover.
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Section 113C ITO 2001; Finance Act 2025 fbr.gov.pk pseb.org.pk PSEB — Pakistan Software Export Board Withholding Tax Complete Guide
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Short answer: Q1: Oct 15, Q2: Jan 15, Q3: Apr 15, Q4: Jul 15 (Sindh; Punjab similar)
For Sindh (SRB): Quarter 1 (Jul-Sep) due Oct 15; Q2 (Oct-Dec) due Jan 15; Q3 (Jan-Mar) due Apr 15; Q4 (Apr-Jun) due Jul 15. For Punjab (PRA): Similar quarterly deadlines per PSTS Act 2012 rules. Late filing triggers penalties and interest. PSEB-registered IT companies must file even 0% returns on time to maintain their registration benefits and avoid penalties.
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SRB Quarterly Return Rules; PSTS Act 2012 Rules e.srb.gos.pk pra.punjab.gov.pk SRB — Sindh Revenue Board PRA — Punjab Revenue Authority
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