The coalition government led by Prime Minister Shehbaz Sharif has incorporated some tangible measures to facilitate the exporters of IT and IT enabled services for next fiscal year.

According to the amended Finance Bill 2022 shows that the government has allowed at least six key concessions during next fiscal year.

i) The IT sector has been provided a reduced tax rate of 0.25% on their export proceeds which is a quarter of the 1% export tax rate provided to all other exporters of goods.

ii) The sector has been removed from tax credit regime to simplify the tax filing system and to remove hassles of compliance that were earlier required to make them eligible for 100% tax credit to claim tax exemption.

iii) The requirements of filing of Withholding Tax Statements and Sales Tax return have been liberalized for the sector and only those who are required under the law will file WHT Statements or the Sales Tax Returns. For individuals having turnover up to Rs. 100 m per year there is no requirement to file WHT A Statement or to deduct tax.

iv) The definition of IT and IT enabled services as provided under the Income Tax Ordinance, 2001 has been liberalized by expanding its scope by making suitable amendments and all inclusive, and “not limited to” definition has been provided.

v) IT and IT enabled services exporters have been provided the facility of obtaining Sales Tax refund in respect of any Sales Tax that has been paid as their input on computers, laptops, stationary other items etc. This facility is not available under the Provincial Sales Tax Law.

vi) The demand of the IT Sector of reviving tax exemption for Venture Capital Fund has been accepted and a new provision has been created for providing Income Tax Exemption to the Venture Capital Fund for three years.

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