Section 154 of the Income Tax Ordinance, 2001 outlines tax collection requirements for export proceeds, indirect exporters and goods cleared for export, with the deducted tax treated as minimum tax.

ISLAMABAD: The Federal Board of Revenue (FBR) has outlined the tax collection mechanism applicable to export income for Tax Year 2027 under Section 154 of the Income Tax Ordinance, 2001.

The FBR issued the updated ordinance as of June 30, 2026, covering the tax year from July 1, 2026, to June 30, 2027. Section 154 specifies the responsibilities of authorised dealers, banks, export processing zone authorities and customs officials in collecting tax on export-related transactions.

Under the provision, every authorised dealer in foreign exchange must deduct tax, including advance tax, from export proceeds when foreign exchange is realised against the export of goods. The applicable rate is prescribed in Division IV of Part III of the First Schedule to the ordinance.

Banking companies are also required to deduct tax when proceeds are realised from the sale of goods to exporters under inland back-to-back letters of credit or other arrangements prescribed by the FBR.

The Export Processing Zone Authority must collect tax when industrial undertakings operating in designated export processing zones export goods.

Section 154 further requires direct exporters and registered export houses to deduct tax when making payments against firm contracts to indirect exporters covered by the relevant customs rules and the Export Facilitation Scheme, 2021.

Additionally, the Collector of Customs must collect tax from the gross value of exported goods at the prescribed rate during customs clearance.

Section 154(4) expressly provides that tax deducted under this section constitutes minimum tax on income arising from the covered transactions. The applicable rates are specified in the First Schedule.