Islamabad, November 26, 2025 – Pakistan continues to offer an important tax incentive aimed at boosting industrial activity and creating jobs across the country.
According to the latest update issued by the Federal Board of Revenue (FBR), the provision of tax credit for employment generation for manufacturers remains intact for Tax Year 2026 under the Income Tax Ordinance, 2001.
The incentive, defined under Section 64B, is designed to support companies establishing new manufacturing units and hiring registered employees. The scheme encourages industries to expand their workforce while reducing their tax burden—making it a strategic tool for stimulating economic growth.
Who Qualifies for the Tax Credit?
The law states that any company formed to establish and operate a new manufacturing unit between July 1, 2015 and June 30, 2019 is eligible for a 10-year tax credit.
How Much Tax Credit Can a Company Claim?
Manufacturers can claim:
• 2% tax credit on the tax payable
• For every 50 employees registered with EOBI or provincial Social Security Institutions
• Up to a maximum of 10% of the total tax payable for the year
This creates a direct link between employment growth and tax relief.
Key Conditions for Availing the Credit
To benefit from Section 64B:
• The company must be incorporated and the manufacturing unit set up between July 1, 2015 and June 30, 2018.
• It must employ more than 50 registered employees in the tax year.
• The company must be registered under the Companies Act, 2017 and have its registered office in Pakistan.
• The unit must be newly established—not formed by splitting, reconstruction, or transfer of machinery from older units.
Important Compliance Note
If FBR later determines that a company did not meet the required conditions, the tax credit will be considered wrongly claimed. FBR may then recompute tax liability for the relevant year.
When Is a Manufacturing Unit Considered “Set Up”?
The unit is treated as set up on the date it becomes ready for production, whether trial or commercial.
Disclaimer: The information provided in this article is for general informational purposes only and is based on publicly available updates from the Federal Board of Revenue (FBR). Tax laws and regulations may change, and individual circumstances can vary. Readers are advised to consult a qualified tax professional or refer to official FBR notifications for accurate and up-to-date guidance.