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Complete income tax, WHT, SST, corporate tax & Finance Act guide for IT companies
| Category | Rate | Legal Basis | Reference | |
|---|---|---|---|---|
| IT export income (PSEB) | 0.25% WHT (final) | ITO 2001 Section 154 | ITO 2001 | |
| IT export income (non-PSEB) | 1% WHT (final) | ITO 2001 Section 153 | ITO 2001 | |
| Corporate tax (IT companies) | 20% | Finance Act 2025, Section 4 | Finance Act 2025 | |
| Super tax | 1-4% | Finance Act 2025, Section 4C | Finance Act 2025 | |
| Minimum tax on turnover | 1.25% | ITO 2001 Section 113 | ITO 2001 | |
| Sindh SST (PSEB) | 0% | SRO 981(I)/2015 | SRO 981(I)/2015 | |
| Punjab SST (PSEB) | 0% | SRO 981(I)/2015 | SRO 981(I)/2015 | |
| KP SST (PSEB) | 0% | SRO 981(I)/2015 | SRO 981(I)/2015 |
| Filing | Frequency | Due Date | Penalty | Reference | |
|---|---|---|---|---|---|
| Income Tax Return | Annual | September 30 | PKR 40,000 + 0.1%/day | ITO 2001 | |
| Provincial SST Return | Monthly | 15th of following month | PKR 10,000 + interest | Provincial Revenue Board | |
| Withholding Tax Statement | Monthly | 15th of following month | PKR 37,000 | FBR | |
| Quarterly WHT Statement | Quarterly | 15th of next quarter | PKR 37,000 | FBR | |
| Company Annual Return | Annual | 30 days after AGM | PKR 500/day | Companies Act 2017 | |
| PSEB Renewal | Annual | Per PSEB notice | Deregistration | PSEB | |
| Audit (revenue > PKR 50M) | Annual | With tax return | PKR 50,000+ | ITO 2001 |
Annual tax compliance workflow for Pakistan IT companies
| Category | Rate | Jurisdiction | Legal Basis | Reference |
|---|---|---|---|---|
| IT export income (PSEB-registered) | 0.25% WHT (final tax) | Federal/ICT | ITO 2001 §154A | Finance Act 2025 |
| IT export income (non-PSEB) | 1% WHT (final tax) | Federal/ICT | ITO 2001 §153 | Finance Act 2025 |
| Corporate tax (IT companies) | 20% | Federal/ICT | Finance Act 2025 §4 | FBR |
| Super tax (banking & beyond) | 1–4% | Federal/ICT | Finance Act 2025 §4C | FBR |
| Minimum tax on turnover | 1.25% | Federal/ICT | ITO 2001 §113 | FBR |
| Startup tax credit | 100% (3 years) | Federal/ICT | Finance Act 2025 §65F(b) | FBR; PSEB mandatory, |
| Digital/marketplace tax | 1% digital / 2% CoD | Federal/ICT | Finance Act 2025 §6A | FBR |
| Province | IT Software Rate | Standard Rate | PSEB Export Rate | Authority | Legal Basis |
|---|---|---|---|---|---|
| Sindh | 3% (CPC 83100, sub-rule 1A) | 15% (Sindh Sales Tax on Services Act 2011 §4) | 0% (Sindh) | SRB | SRB Notification July 2025 (CPC 83100, sub-rule 1A); SRO 981(I)/2015 (0% PSEB export) |
| Punjab | 0% (Zero-Rated) (Punjab) | 0% (Zero-Rated) | 0% (Punjab) | PRA — Punjab Revenue Authority | Punjab Sales Tax on Services Act 2012, Notification per PRA directive; SRO 981(I)/2015 (0% PSEB export) |
| KP | 2% digital/IT (KP), 5% IT consulting (KP) | 5% (Digital) | 0% (KP) | KPRA | KP Finance Act (annual), Notification per KPRA; SRO 981(I)/2015 (0% PSEB export) |
| Balochistan | Check BRA notification (concessional pending) | 15% (Balochistan Sales Tax on Services Act 2015) | 0% (Balochistan) | BRA | Balochistan Sales Tax on Services Act 2015; Per BRA notification (0% PSEB export) |
| ICT | Federal (no provincial SST) | N/A | 0.25%/1% WHT (Federal/ICT) | FBR | ITO 2001 §154A |
| Benefit | Details | Jurisdiction | Legal Basis |
|---|---|---|---|
| Income tax holiday | 10 years from COD | Federal | SEZ Act 2012 §11 |
| Duty-free capital goods import | One-time, for zone enterprise | Federal (Customs) | SEZ Act 2012 |
| STZA zones — additional incentives | 10-year tax holiday + 0% GST on zone-internal services | Federal | STZA Act 2021 |
| WHT Type | Rate | Jurisdiction | When Applies | Reference |
|---|---|---|---|---|
| Export remittance (PSEB) | 0.25% | Federal/ICT | Every IT export payment received | ITO 2001 §154A |
| Export remittance (non-PSEB) | 1% | Federal/ICT | Every IT export payment received | ITO 2001 §154A |
| Salary WHT | Variable (slab-based) | Federal/ICT | Monthly payroll deduction | ITO 2001 §149 |
| Contractor payments | 7% (non-corporate) / 4.5% (corporate) | Federal/ICT | Payments to service providers | ITO 2001 §153 |
| Rent paid | 15% (buildings) | Federal/ICT | Office/commercial rent | ITO 2001 §155 |
| Reference | Description | Jurisdiction | Source |
|---|---|---|---|
| ITO 2001 | Income Tax Ordinance — primary taxation law | Federal/ICT | FBR |
| Finance Act 2025 | Latest federal budget — tax rates and amendments | Federal | FBR |
| SRO 981(I)/2015 | 0% SST for PSEB-registered IT/ITeS exporters | All provinces | SRB |
| SRB-3-4/45/2025 | Sub-rule (1A): 3% deemed automatically exercised for IT software | Sindh | SRB |
| SRB-3-4/28/2025 | New CPC codes for IT services (effective July 2025) | Sindh | SRB |
| Sales Tax Act 1990 | Federal sales tax framework | Federal | FBR |
| Customs Act 1969 | Import/export customs framework | Federal | FBR |
| STZA Act 2021 | Special Technology Zones — 10-year tax holiday | Federal | STZA — Act & Rules |
| BOI Investment Policy 2023 | 100% foreign ownership IT, 35% FCY retention, 0-5% equipment duty | Federal | BOI |
| Protection | Detail | Legal Basis | Jurisdiction |
|---|---|---|---|
| 100% Foreign Ownership | IT & ITeS — no government permission, no equity cap, no minimum capital | PIP 2023 §10.1.1 | Federal |
| 100% Repatriation | Capital, profits, dividends in investment currency or any freely usable currency | PIP 2023 §13.6; SBP FEMA | Federal |
| Royalty/BPO Remittance | Royalties, tech fees, franchise fees, BPO payments — allowed per SBP FX Manual | PIP 2023 §13.6 | Federal |
| National Treatment & MFN | Treatment no less favorable than domestic investors or investors from other countries | PIP 2023 §13.3 | Federal |
| No Expropriation | Except for public purpose, non-discriminatory, due process, market-price compensation in FX | PIP 2023 §13.4 | Federal |
| Policy Stability | Investors protected against future policy shifts with negative impact on existing investments | PIP 2023 §13.2 | Federal |
| Dispute Resolution | Investment Ombudsman (FIPPA 2022); access to national and international arbitration | PIP 2023 §13.9-10 | Federal |
| IPR Protection | 3 specialized IP Tribunals; IPO window for foreign investors | PIP 2023 §13.11-12 | Federal |
| 66 DTTs | 66 Double Taxation Treaties to reduce cross-border withholding taxes | PIP 2023 §11.6.4 | Federal |
| MIGA | Multilateral Investment Guarantee Agency membership — political risk insurance for foreign investors | PIP 2023 §13 | Federal |
This ordinance introduced enhanced FBR enforcement powers. Key provisions for IT companies:
Source: Tax Laws (Amendment) Ordinance 2025 Federal/ICT