The Federal Board of Revenue (FBR) has collected Rs7 billion from the export of services in fiscal year 2024–25, reflecting a robust 30% increase from Rs5.38 billion recorded in the previous year.
Officials said the rise in revenue is largely driven by the rapid expansion of Pakistan’s IT and IT-enabled services sector, which continues to bolster foreign exchange inflows.
Under Section 154A of the Income Tax Ordinance, 2001, the FBR levies a final withholding tax on service exports. The applicable rate is 0.25% for exports of computer software and IT services by Pakistan Software Export Board (PSEB)-registered entities, while other services are subject to a 1% tax on export proceeds.
Authorized dealers in foreign exchange are required to deduct tax on various categories of service exports — including IT services, technical services, royalties, foreign construction contracts, and other Board-notified services. Once the returns and withholding statements are filed, the deducted amount is treated as final tax, with no credit permitted for foreign taxes paid.
The FBR, in coordination with the State Bank of Pakistan, sets the procedures for tax payment and retains the authority to expand or limit the list of services covered under Section 154A.
The strong revenue performance underscores the growing importance of Pakistan’s service exports, particularly in IT, in strengthening the national tax base.
