Taxation of Export of IT Services under section 154A
Amendments made in section 154A read with Division IVA of Part III of First Schedule to the Ordinance
Taxation of Export of IT Services under section 154A: Finance Act 2023 to give effect to the financial proposals of the Federal Government for the year beginning on the first day of July, 2023, and to amend certain laws WHEREAS, it is expedient to make provisions to give effect to the financial proposals of the Federal Government for the year beginning on the first day of July, 2023, and to amend certain laws for the purposes hereinafter appearing;
An exporter of IT & ITeS is charged to concessionary final tax rate of 0.25% on export proceeds realised if such exporter is registered with and duly certified by the Pakistan Software Export Board (PSEB).
The exporters of IT & ITeS can avail above referred concessionary final tax rates after fulfilment of conditions listed in sub-section 2 of section 154A of the Ordinance. One such condition was filing of sales tax returns if required to be filed. In order to facilitate the exporters of IT & ITeS, through Finance Act, 2023, a new proviso has been inserted in sub-section (2) of section 154A, whereby the aforesaid mandatory condition of filing of sales tax return if required, for the purpose of availing concessionary final tax regime under this section has been withdrawn. Needless to say that this relaxation is for availing reduced rate of 0.25% under section 154A of the Ordinance, and does not by itself absolve the exporter to file Sales Tax return under respective statutes if required to be filed.
Furthermore, in order to provide certainty of tax rates for exporters for IT & ITeS, an amendment has been made in Division TVA of Part III of First Schedule to the Ordinance through Finance Act, 2023 whereby the concessionary final tax rate of 0.25% will continue for tax years 2024, 2025 and 2026.
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