Karachi, August 11, 2025 – The Federal Board of Revenue (FBR) has issued an explanation on the definition and eligibility criteria for a startup under the Income Tax Ordinance, 2001, applicable for the tax year 2026 (July 2025 to June 2026).
As per the FBR, a startup refers to a business of a resident individual, association of persons (AOP), or company that commenced operations on or after July 1, 2012. The entity must be engaged in, or have the intention to provide, technology-driven products or services to any sector of the economy. Additionally, the business must be registered with and certified by the Pakistan Software Export Board (PSEB) and have an annual turnover of less than Rs100 million in each of the last five tax years.
The FBR also clarified that a startup can include any business or class of businesses notified by the Board, subject to conditions approved by the Federal Minister in charge, and published in the official Gazette. This provision allows flexibility for the government to extend startup recognition to emerging sectors in line with technological advancements and economic priorities.
Officials stated that the clarification aims to provide certainty to entrepreneurs, investors, and tax professionals, ensuring that eligible businesses can fully benefit from the tax exemptions and incentives designed to promote innovation, job creation, and export growth in Pakistan’s technology sector.