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FBR Issues Clarification on Tax Exemption from Income of Exported IT Services

The Federal Board of Revenue (FBR) has issued a clarification regarding the news about a proposal to withdraw exemption available to income from exports of computer software or IT services or IT enabled services.

FBR has clarified that under the current legal dispensation, the exports of computer software, IT Services or IT enabled services are exempt from tax as provided under clause (133) of Part-I of the Second Schedule to the Income Tax Ordinance, 2001.


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FBR said, “This exemption is subject to the condition that 80% of the export earnings are remitted to Pakistan through a normal banking channel. However, the persons claiming exemptions are subject to minimum tax on their turnover.  There is a proposal to widen the scope of tax concessions available to income from the export of software, IT services and IT-enabled services. For this purpose, the exemption is being shifted to the tax credit regime.”

“It has been proposed that such income may be provided a hundred percent tax credit against tax liability including minimum tax liability on their turnover. The proposal enhances the scope of concession to the IT sector contrary to the news circulating in social media,” said the FBR.

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