FBR identifies Sindh coal mining projects and PSEB-certified startups as key beneficiaries of the 100% tax credit under Section 65F.
ISLAMABAD: The Federal Board of Revenue (FBR) has specified the persons and incomes eligible for a 100 per cent tax credit under Section 65F of the Income Tax Ordinance, 2001, for Tax Year 2027.
According to the Income Tax Ordinance, 2001, updated up to June 30, 2026, the tax credit is equal to 100 per cent of the tax payable under any provision of the Ordinance, including minimum tax, alternate corporate tax and final taxes, subject to the conditions, limitations and scope prescribed under the law.
Coal mining projects in Sindh
The first eligible category covers persons engaged in coal mining projects in Sindh.
However, the tax credit is restricted to income earned from supplying coal to power generation projects.
The FBR has clarified that the benefit is available only against income derived from the operations of coal mining projects in Sindh where the coal is supplied to power generation projects.
Therefore, the tax credit does not automatically apply to other income earned by a person engaged in coal mining activities.
Startups certified by PSEB
The second category covers qualifying startups, as defined under clause (62A) of Section 2 of the Income Tax Ordinance, 2001.
A qualifying startup is entitled to the 100 per cent tax credit for the tax year in which it is certified by the Pakistan Software Export Board (PSEB) and the following two tax years.
The incentive can therefore potentially apply for a total of three tax years, beginning with the year in which the startup obtains the required PSEB certification.
Conditions for claiming 100% tax credit
The FBR has prescribed several conditions that taxpayers must fulfil to claim the tax credit.
A taxpayer must have filed the relevant income tax return for the tax year.
Where the taxpayer is required to act as a withholding agent, it must also have filed the relevant withholding tax statements for the applicable provisions of the Income Tax Ordinance.
In addition, where the taxpayer is required to file sales tax returns under any federal or provincial sales tax law, it must have filed the sales tax returns for the tax periods corresponding to the relevant tax year.
100% credit is subject to conditions
Although Section 65F provides a tax credit equal to 100 per cent of tax payable, the benefit is not an unconditional exemption.
Eligibility remains subject to the requirements, limitations and conditions specified under the Income Tax Ordinance.
For Tax Year 2027, the key categories covered by Section 65F are therefore qualifying coal mining projects in Sindh supplying coal to power generation projects and eligible startups certified by PSEB.
The provision covers tax payable under the Income Tax Ordinance, including minimum tax, alternate corporate tax and final taxes, to the extent specified under Section 65F.