Tax credit for certain persons section 65F
Tax credit for certain persons section 65F: A new section 65F has been inserted, which is reproduced as follows;
65F. (1) Income of following taxpayers shall be allowed a tax credit equal to one hundred per cent of the tax payable under any provisions of this Ordinance including minimum and final taxes for the period, to the extent, upon fulfillment of conditions and subject to limitations detailed as under: –
a) persons engaged in coal mining projects in Sindh supplying coal exclusively to power generation projects;
b) a startup as defined in clause (62A) of section 2 for the tax year in which the startup is certified by the Pakistan Software Export Board and the following two tax years;
c) persons deriving income from exports of computer software or IT services or IT enabled services up-to the period ending on the 30th day of June, 2025:
Provided that eighty per cent of the export proceeds is brought into Pakistan in foreign exchange remitted from outside Pakistan through normal banking channels.
Explanation. – For the purpose of this clause, –
i) “IT services” include software development, software maintenance, system integration, web design, web development, web hosting and network design; and
ii) “IT enabled services” include inbound or outbound call centers, medical transcription, remote monitoring, graphics design, accounting services, HR services, telemedicine centers, data entry operations, locally produced television programs and insurance claims processing.
(2) The tax credit under sub-section (1) shall be available subject to fulfillment of the following conditions, namely: –
a) return has been filed;
b) tax required to be deducted or collected has been deducted or collected and paid
c) withholding tax statement for the immediately preceding tax year have been filed; and
d) sales tax returns for the tax periods corresponding to relevant tax year have been field:
Provided the above credits will not exclude the provision of audit under section 214C and section 177.
Income of the above types of persons was previously exempt under the respective clauses of the Second Schedule. Tax Laws (Second Amendment) Ordinance, 2021 has now replaced these exemptions with 100% tax credit by introduction of above section 65F and all the above conditions has to be met in order to claim 100% tax credit.