Karachi, April 29, 2026 — The Pakistan Software Houses Association (P@SHA) has urged the government to extend the final tax regime (FTR) of 0.25% on IT export receipts for at least five years to sustain growth in the country’s rapidly expanding technology sector.
In its budget proposals for 2026–27, PASHA emphasized that the existing 0.25% FTR under Section 154A of the Income Tax Ordinance, 2001, remains valid only until Tax Year 2026 (ending June 2026). The incentive currently applies to exporters registered with the Pakistan Software Export Board (PSEB).
According to the association, this low and predictable tax rate has been the single most effective fiscal incentive driving IT export growth. However, recurring uncertainty about its continuation is creating challenges for long-term investment planning and international client commitments.
Recommendation for Policy Stability
PASHA has recommended extending the 0.25% FTR for a minimum of five years, covering Tax Years 2027 to 2031. The association also expressed a strong preference for a longer, 10-year extension through Tax Year 2036 to ensure sustained sectoral growth.
Why Extension Matters
The association highlighted that IT companies require policy certainty to make strategic decisions such as expanding delivery centers, hiring skilled workforce, and bidding on multi-year global contracts. Competing countries like India and Vietnam offer IT sector incentives spanning 10 to 15 years, providing a stable investment environment.
Positive Impact on Revenue and Exports
PASHA noted that the current tax regime has not reduced government revenue but instead contributed to its growth. IT export receipts have consistently increased, reaching $3.2 billion in FY2023–24 and rising to $3.8 billion in FY2024–25.
The association warned that removing or altering the incentive could discourage export activity and reduce foreign exchange inflows rather than increase tax collection.
Industry-Wide Support
Reiterating its stance, PASHA described the extension of the FTR as a core policy priority for the IT industry, stressing that long-term continuity is essential for maintaining Pakistan’s competitiveness in the global technology market.