Is the 100% tax credit on IT exports and its 80% remittance rule still available?

What does the law say now?

Section 65F of the Income Tax Ordinance, 2001, as amended to 30 June 2026, gives a tax credit equal to one hundred per cent of tax payable to only two categories in sub-section (1):

• Clause (a): persons engaged in coal mining projects in Sindh, to the extent the income is derived from supplying coal to power generation projects.
• Clause (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 next two tax years.

There is no clause for income from IT exports. A freelancer or software house exporting services is not in section 65F(1) unless it qualifies as a certified startup under clause (b).

What happened to the IT export clause?

The footnotes to section 65F in the consolidated Ordinance record that “Clause (c) omitted by the Finance Act, 2022”, and reproduce the omitted text:

“(c) Income from exports of computer software or IT services or IT enabled services as defined in clause (30AD) and (30AE) of section 2 upto the period ending on the 30th day of June, 2025: Provided that eighty percent of the export proceeds is brought into Pakistan in foreign exchange remitted from outside Pakistan through normal banking channels.”

That is the “80% rule” still repeated in older guides. Section 5 of the Finance Act, 2022, which amends the Ordinance, says in terms: “in section 65F, in sub-section (1), clause (c) shall be omitted”. The same Act changed section 154A at the same time.

Note also that the omitted clause carried its own end date of 30 June 2025. Even on its original wording, it did not reach tax year 2027.

How were the two sections linked?

When section 154A was inserted by the Finance Act, 2021, clause (a) of section 154A(1) covered IT exports “in case tax credit under section 65F is not available”. The Finance Act, 2022 replaced that expression with the current wording, so clause (a) now reads: “exports of computer software or IT services or IT enabled services where the exporter is registered with and duly certified by the Pakistan Software Export Board (PSEB).”

In plain words: before 2022, section 154A picked up IT exporters who did not get the section 65F credit. After 2022, the credit is gone and section 154A is the rule, with the rate depending on PSEB registration.

What applies to IT export income in tax year 2027?

Division IVA of Part III of the First Schedule sets the section 154A rates:

Type of receipt	Rate
Export proceeds of computer software, IT services or IT-enabled services by persons registered with the Pakistan Software Export Board	0.25% of proceeds, for tax years 2024 up to tax year 2029
Any other case	1% of proceeds

Under section 154A(2), the tax deducted is a final tax on the income once a return has been filed and the other conditions in that sub-section are met.

Worked example (illustrative figures)

Farah, who runs a two-person software business from Rawalpindi. She is registered with the PSEB and receives Rs. 6,000,000 in export proceeds in tax year 2027. An old blog post tells her she owes nothing because of a 100% credit.

1. Section 65F(1) has no clause for IT export income after the Finance Act, 2022. The old blog post describes clause (c), which no longer exists.
2. Section 154A(1)(a) applies because she is PSEB-registered.
3. Division IVA rate: 0.25%.
4. Tax deducted: Rs. 6,000,000 x 0.25% = Rs. 15,000.
5. If she files her return and meets the other conditions in section 154A(2), Rs. 15,000 is her final tax on that income.

If Farah were not PSEB-registered, the “any other case” row would apply: Rs. 6,000,000 x 1% = Rs. 60,000.

What if I am a certified startup?

Section 65F(1)(b) is still in force. It needs a startup “as defined in clause (62A) of section 2” and certification by the Pakistan Software Export Board, and it lasts for the year of certification and the next two tax years. Section 65F(2) adds conditions: a return has been filed, withholding statements have been filed where you are a withholding agent, and sales tax returns have been filed if required. The definition of startup has its own conditions, covered on a separate page.

Common mistakes

• Relying on a guide written before the Finance Act, 2022. The 100% IT export credit and its 80% remittance proviso were both in clause (c), and the whole clause was omitted.
• Treating the 80% rule as a condition of section 154A. Neither section 154A nor Division IVA contains it.
• Confusing the startup credit with a general exporter credit. Clause (b) is limited to certified startups and to three tax years.

What to check in the official text

Read section 65F with its footnotes, section 154A(1) and (2), and Division IVA of Part III of the First Schedule in the official PDF of the Ordinance amended to 30 June 2026. For the history, read section 5 of the Finance Act, 2022, which omitted clause (c) and amended section 154A(1)(a). The PSEB’s own registration and certification procedure is outside this corpus.