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Income Tax, Sales Tax, Federal Excise & Withholding Tax — All IT/ITeS tax obligations
| Category | Tax Rate | Section | Notes | Reference |
|---|---|---|---|---|
| IT/ITeS Exports (PSEB Certified) | 1% Final Tax | Sec 154 | No further tax liability on export income | |
| IT/ITeS Exports (PSEB + Active Taxpayer) | 0.25% Final Tax | Sec 154(1A) | Reduced rate for PSEB-certified active taxpayers | |
| IT Services (Non-Export, Domestic) | 29% Corporate | Sec 1(37A) | Standard corporate rate applies | |
| Salaried IT Employees (PKR 600K-1.2M) | 15% | Sec 1(37A)+Sch I | Slab rates apply | |
| Salaried IT Employees (above PKR 4.1M) | 35% | Sch I Part I | Top slab rate | |
| Super Tax on High Income | 1-10% | Sec 4C | IT exporters EXEMPT from super tax | |
| Tax Holiday (New IT Exporters) | 0% for 3-10 years | Sec 108 | First IT export income; PSEB certified | |
| Minimum Tax on Turnover | 1.25% | Sec 113 | On turnover (IT exports exempt via Sec 154) | |
| Capital Gains (Listed Securities) | 15% | Sec 37(1A) | On disposal of listed securities | |
| Dividend Tax | 15% | Sec 150 | Final tax on dividends received | |
| Royalty/Technical Fees (Non-Resident) | 15% | Sec 152 | Withholding by Pakistani payer |
| Payment Type | Tax Rate | Section | Threshold | Notes | Reference |
|---|---|---|---|---|---|
| IT Services — PSEB Certified Export | 1% | Sec 154 | No threshold | Final tax on export remittances | |
| IT Services — PSEB + FBR Active Taxpayer | 0.25% | Sec 154(1A) | No threshold | Super reduced rate | |
| IT Services — Domestic | 15% | Sec 153(1B) | No threshold | If NTN provided | |
| IT Services — No NTN | 20% | Sec 153(1B) | No threshold | Higher rate for non-filers | |
| Software/Royalty to Non-Resident | 15% | Sec 152 | PKR 0 | Treaty may reduce rate | |
| Contractor Services (IT) | 7% | Sec 155 | PKR 0 | If NTN; 10% if no NTN | |
| Salary — IT Employees | Slab rate | Sch I Part I | PKR 50K/month | Employer deducts monthly | |
| Bank Profit | 15% | Sec 151 | PKR 0 | On profit on debt | |
| Rent — Office Space | 15% | Sec 155 | PKR 300K/year | Commercial property | |
| Electricity Bill | 7.5% | Prov Tax | PKR 25K/month | Variable by province |
| Authority | IT Services Rate | Legal Basis | Registration Required | Notes | Reference |
|---|---|---|---|---|---|
| Federal (FBR) | 0% | SRO 981(I)/2015 — 5th Schedule | Yes, if turnover > PKR 5M | Zero-rated on export of IT services | |
| Sindh (SRB) — PSEB Export | 0% (Sindh) | SRO 981(I)/2015 | Yes — no threshold | 0% zero-rated; ITC refund available | |
| Sindh (SRB) — Domestic IT | 3% | SRB-3-4/45/2025 sub-rule (1A) | Yes — no threshold | Auto 3% for CPC 7331,8313-8316,843; no ITC | |
| Sindh (SRB) — Standard (non-IT) | 3% (Concessional) | SST Act 2011 Section 8(1) | Yes — no threshold | Standard rate; ITC available; CPC 8363,83700 | |
| Punjab (PRA) | 0% | PRA applies SRO 981 | Yes | Online at pra.punjab.gov.pk | |
| KP (KPRA) | 0% | KPRA applies SRO 981 | Yes | Online at kpra.kp.gov.pk | |
| Balochistan (BRA) | 0% | BRA applies SRO 981 | Yes | Online at bra.gob.pk |
| Deadline | Activity | Authority | Penalty for Late Filing | Reference |
|---|---|---|---|---|
| 15th Monthly | WHT deposit (previous month collections) | FBR | PKR 500-10,000 + default surcharge 18% | |
| 18th Monthly | Sales tax return (federal) | FBR | PKR 500 per day of delay | |
| 18th Monthly | Provincial sales tax return | SRB/PRA/KPRA/BRA | Varies by province | |
| 15th Following Month | EOBI contribution deposit | EOBI | Fine + penalty per employee | |
| June 30 | Companies — tax year end | FBR | N/A (financial year end) | |
| September 30 | Individual — annual tax return | FBR | PKR 1,000-20,000 penalty | |
| December 31 | Companies — annual tax return | FBR | PKR 20,000+ penalty | |
| Within 6 months of YE | AGM and annual accounts filing | SECP | PKR 100/day after due date | |
| April 30 (or as notified) | SECP Annual Return (Form 29) | SECP | PKR 100/day after due date | |
| December 31 (for TY ending June 30) | Wealth statement | FBR | PKR 5,000-50,000 penalty |
| Category | Rate | Basis | Reference | |
|---|---|---|---|---|
| IT Export WHT (PSEB-registered) | 0.25% | Final tax on export proceeds | Section 154, ITO 2001 | |
| IT Export WHT (non-PSEB) | 1% | Final tax on export proceeds | Section 152A, ITO 2001 | |
| Corporate Tax Rate | 29% | Taxable income | Finance Act 2025 | |
| Super Tax | 0-10% | Based on income brackets | Section 4C, Finance Act 2025 | |
| Minimum Tax (turnover) | 1.25% | Gross turnover | Section 113, ITO 2001 | |
| Withholding on Services (Sec 153) | 3-8% | Service payments | ITO 2001 | |
| Social Media Tax (SRO 545) | Variable | Quarterly WHT | ITO 2001 Chapter VA |
The 100% income tax exemption for IT/ITeS exports under Clause 133 has been withdrawn effective Finance Act 2024. All IT companies must now pay income tax at standard corporate rates.
Source: FBR Official Website | Citation: Finance Act 2024, Clause 133 Removal
The 100% income tax exemption for IT/ITeS exports under Clause 133 of the Income Tax Ordinance, 2001 has been completely withdrawn effective Finance Act 2024.
Source: FBR Official Website | Citation: Finance Act 2024, Removal of Clause 133
| Company Type | Tax Rate | Legal Basis |
|---|---|---|
| Public Companies (Listed) | 20% (Federal/ICT) | Section 4(1)(a) - Income Tax Ordinance, 2001 |
| Private Companies (Unlisted) | 20% (Federal/ICT) | Section 4(1)(b) - Income Tax Ordinance, 2001 |
| Small Companies | 20% (Federal/ICT) | Section 4(1)(c) - Income Tax Ordinance, 2001 |
| Banking Companies | 39% (Federal/ICT) | Section 4(1)(d) - Income Tax Ordinance, 2001 |
Source: FBR Official Website | Income Tax Ordinance, 2001 (as amended by Finance Act 2024) | Rates applicable for Tax Year 2025
| Total Export Revenue: | PKR 50,000,000 |
| Operating Expenses: | PKR 37,000,000 |
| Taxable Income: | PKR 15,000,000 |
| Corporate Tax Rate: | 20% (Federal/ICT) |
| Income Tax Payable: | PKR 3,000,000 |
| Less: WHT Credits: | PKR 500,000 |
| Net Tax Payable: | PKR 2,500,000 |
Withholding tax is deducted at source from export proceeds. The rate varies based on PSEB registration status. This WHT is adjustable against final tax liability at year-end.
| PSEB Registration Status | WHT Rate | Legal Basis |
|---|---|---|
| PSEB-Registered Companies | 0.25% (Federal/ICT) | Section 153(1)(b) - Income Tax Ordinance, 2001 |
| Non-PSEB Registered Companies | 1% (Federal/ICT) | Section 153(1)(b) - Income Tax Ordinance, 2001 |
Source: FBR Official Website | Income Tax Ordinance, 2001 (as amended by Finance Act 2024) | Section 153(1)(b) - WHT on Export of Services
| Export Invoice Value: | $100,000 |
| Exchange Rate: | PKR 280/USD |
| PKR Value: | 28,000,000 |
| WHT Rate: | 0.25% (Federal/ICT) |
| WHT Deducted: | PKR 70,000 |
Annual Turnover Threshold for Mandatory Sales Tax Registration
Standard Sales Tax Rate (Federal FED + Provincial SST)
| Service Category | Sales Tax Rate | Remarks |
|---|---|---|
| Software Development Services | 0% (Exempt) | Export of software exempt from sales tax |
| IT Consulting Services (Local) | 18% | Standard rate applies to local services |
| IT Training Services | 0% (Exempt) | Educational services exemption |
| Cloud Services (Local) | 18% | Standard rate for domestic cloud services |
| Data Center Services | 18% | Standard rate applies |
Source: Sales Tax Act (as amended 2025-26) | Sales Tax Act, 1990 (as amended) (as amended)
| Filing Type | Frequency | Due Date | Penalty for Non-Compliance |
|---|---|---|---|
| Income Tax Return | Annual | September 30 | PKR 40,000 or 0.1% of tax payable per month of delay |
| Quarterly Advance Tax | Quarterly | 15th of month following quarter-end | Interest @ 12% p.a. (Federal ITO) on shortfall |
| Sales Tax Return | Monthly | 15th of following month | PKR 10,000 or 5% of tax due, whichever is higher (per Sales Tax Act 1990 §33) |
| Statement of Deductions | Quarterly | End of month following quarter | PKR 20,000 per statement (per ITO 2001 §182) |
Source: FBR Official Website | Income Tax Ordinance, 2001 | Sales Tax Act, 1990 (as amended)
| 1st Quarter: | April 15, 2025 |
| 2nd Quarter: | July 15, 2025 |
| 3rd Quarter: | October 15, 2025 |
| 4th Quarter: | January 15, 2026 |
| Annual Return: | September 30, 2025 |
| Monthly Sales Tax: | 15th of following month |
| Withholding Statements: | End of month following quarter |
Set reminders 15 days before each deadline to ensure timely compliance. Late filing penalties can be substantial, and non-compliance may result in suspension of tax exemptions and bank account freezing.
| Violation | Penalty Amount | Legal Basis |
|---|---|---|
| Late Filing of Income Tax Return | PKR 40,000 or 0.1% of tax payable per month of delay, whichever is higher (per ITO 2001 §182) | Section 182(1) - Income Tax Ordinance, 2001 |
| Non-Filing of Income Tax Return | PKR 100,000 or 0.5% of taxable income, whichever is higher | Section 182(2) - Income Tax Ordinance, 2001 |
| Late Payment of Tax | Interest @ 12% per annum (Federal ITO §205) on outstanding amount | Section 205 - Income Tax Ordinance, 2001 |
| Concealment of Income | 100% to 200% of tax evaded | Section 191 - Income Tax Ordinance, 2001 |
| Failure to Maintain Records | PKR 10,000 to PKR 100,000 | Section 182(4) - Income Tax Ordinance, 2001 |
| Violation | Penalty Amount | Legal Basis |
|---|---|---|
| Late Filing of Sales Tax Return | PKR 10,000 or 5% of tax due, whichever is higher (per Sales Tax Act 1990 §33) | Section 33 - Sales Tax Act, 1990 (as amended) |
| Non-Registration (Required) | PKR 50,000 or 10% of turnover, whichever is higher | Section 33A - Sales Tax Act, 1990 (as amended) |
| Short Payment of Tax | 100% of tax short-paid + interest @ 12% p.a. (Federal ITO) | Section 34 - Sales Tax Act, 1990 (as amended) |
| False Statement in Return | PKR 100,000 or imprisonment up to 1 year, or both | Section 35 - Sales Tax Act, 1990 (as amended) |
FBR's IRIS is the primary portal for all income tax filing, registration, and compliance. Key features:
FBR launched TaxRay (✓✓✓?) — an AI-powered tax knowledge and facilitation portal:
Ask tax questions in English or Urdu, get instant answers
Search SROs, circulars, and tax laws with AI-powered relevance
Locate specific tax forms, notifications, and guidelines
FBR has launched a new Digital Invoicing System for businesses. IT companies should prepare for mandatory adoption:
Under Finance Act 2025, a super tax applies to high-income individuals and companies:
| Category | Super Tax Rate | Income Threshold |
|---|---|---|
| Banking companies | 10% (Federal super tax) | All income above threshold |
| High-income individuals | 1-4% (slab) | Income above Rs. 150 million/year |
| IT Export Companies | class="text-success">Exempt | N/A → IT exporters are NOT subject to super tax on export income |
| Non-export IT income | 1% (if applicable) | If total income exceeds Rs. 150M |
FBR Budget 2025-26, Finance Act 2025 (PDF)]
FBR has a dedicated IT sector facilitation desk and online services:
This information is provided for general guidance purposes only. Tax laws and regulations are subject to frequent changes. Always consult with a qualified tax professional or FBR directly for specific advice tailored to your situation. P@SHA does not assume any liability for decisions made based on this information.
The President promulgated the Tax Laws (Amendment) Ordinance 2025 on 2 May 2025, introducing significant enforcement powers for FBR. While these provisions apply to all taxpayers, IT companies should be aware of the following changes:
| Provision | What It Does | Impact on IT Companies | Jurisdiction |
|---|---|---|---|
| Section 138(3A) — Immediate Recovery | If a tax issue is decided by High Court or Supreme Court, the tax payable becomes immediately due, overriding any other time provisions | If an IT company loses a tax appeal at H/C level, the entire tax becomes payable immediately — no deferment | Federal/ICT |
| Section 140(6A) — Immediate Recovery from Assessment | Tax payable under any assessment order becomes immediately recoverable if the issue is decided by H/C or SC | Assessments against IT exporters (e.g., minimum tax disputes) that reach court become immediately enforceable | Federal/ICT |
| Section 175C — FBR Officer Posted at Business Premises | FBR/Chief Commissioner may post an Officer of Inland Revenue at any business premises to monitor production, supply of goods, rendering of services, and stock of goods | Direct impact on IT companies — FBR can station officers at IT offices to monitor service delivery and revenue. This could apply to large IT exporters or companies under investigation | Federal/ICT |
Source: Tax Laws (Amendment) Ordinance 2025 — FBR | Finance Act 2025 Federal/ICT
Social Media Content Taxation (SROs)SOURCE VERIFIED
New Taxation Regime for Digital Content Creators
FBR has issued specific SROs to tax income derived from social media content creation and digital platforms. This includes earnings from YouTube, TikTok, Instagram, Facebook monetization, and other digital content platforms.
Key SROs on Social Media Taxation
Source: FBR SRO Notifications | SRO 545(I)/2026 (proposed — no official gazette link found), SRO 546(I)/2026 (proposed — no official gazette link found), SRO 1366(I)/2025, SRO 288(I)/2026
Tax Rates for Social Media Content Creators
Individual Content Creators
Registered Companies (Content Production)
Registration Requirements for Content Creators
Registration Portal: FBR e-Portal | Helpline: 051-111-227-227