The minister suggested that individuals no longer need to file a sales tax return in order to take advantage of the 0.25 percent concessional rate.
To encourage investment in the IT sector, the federal government has decided to lower tax rates on investments in the sector, provide tax breaks to independent contractors, and normalise duty-free goods.
In order to promote IT exports in the nation, the Finance Minister on Friday also suggested that the 0.25 percent discounted income tax rate remain in place for the following three years in the budget 2023–24 presentation.
While pointing out that the standard tax rate on banks for investments is currently 39 percent, the minister acknowledged the nation’s immense talent in the field of information technology and argued that banks should be given a lower tax rate of 20 percent to facilitate lending on investments in the IT sector.
The finance minister added that the government had suggested providing duty-free goods in the area to promote investment in the IT industry. He suggested designating the sector as a SME so that people could benefit from the lower income tax rates that are unique and only available to this sector.
Minister proposed to issue Automated Exemption Certificates to non-residents for IT/IT-related services exporters within 30 days and to lower the GST for IT and ITeS services in Islamabad from 15% to 5%.
The minister suggested that individuals no longer need to file a sales tax return in order to take advantage of the 0.25 percent concessional rate. The minister continued, “Youth in Pakistan work from home as independent contractors, bringing crucial foreign exchange into the country.”
If an individual’s IT and IT-enabled services exports totaled less than $24,000 in the previous fiscal year, the minister suggested that they be exempt from sales tax registration and file a streamlined single-page income tax return.
ITES, or information technology enabled services, refers to the outsourcing of processes where the provider uses telecommunications technologies and the Internet to provide those services, primarily for businesses outside the information technology (IT) field.