Islamabad, July 7, 2025 – Big news for tech professionals and businesses! If you’re offering IT services in Islamabad, the tax landscape just became a lot more favorable — and it’s time to take notice.
The Federal Board of Revenue (FBR) has officially rolled out a reduced tax rate specifically for IT-based services operating within the Islamabad Capital Territory. As per the latest updates to the Islamabad Capital Territory (Tax on Services) Ordinance, 2001 — now amended through the Finance Act, 2025 — a lower tax rate of just 5% will apply from July 1, 2025, for qualifying tech services.
Here’s the catch: to benefit from the reduced tax, service providers must forego input tax adjustments and refunds. If you choose to claim those, the regular 15% flat rate will still apply.
So, what counts as eligible IT services? The FBR has laid it out clearly: this includes, but is not limited to, software development, software maintenance, web design, web hosting, system integration, network design, and more. Essentially, if you’re involved in digital systems, apps, or websites — you’re likely covered.
Meanwhile, IT-enabled services such as call centers (inbound or outbound), telemedicine, medical transcription, data entry, cloud storage, accounting, and even TV program production also fall under this umbrella.
This move signals Islamabad’s intent to become a regional tech hub by attracting startups, freelancers, and software companies through fiscal incentives. It’s part of a broader push to grow Pakistan’s digital economy — and Islamabad is clearly leading the charge.
Whether you’re a small developer building the next big app, or a large company offering remote monitoring or HR solutions, the reduced tax rate makes Islamabad a far more attractive base for your operations.
If you’re in the tech business, this is your chance to scale with lower costs and higher margins. Check if your business qualifies and make the most of this Islamabad-only incentive for IT services. Don’t miss out — the digital revolution just got a tax break!