Is the 0.25% tax on IT exports only for PSEB-registered companies, and what is the rate if we are not registered or our registration lapses?

Registration with the Pakistan Software Export Board (PSEB) is what separates the two rates in Division IVA. A software house that is registered can have 0.25% deducted from its IT export proceeds. One that is not falls into the “any other case” row, where the rate is 1%, four times the registered rate.

What does the law say?

Section 154A(1) lists the foreign exchange proceeds from which a bank must deduct tax. Clause (a) covers “exports of computer software or IT services or IT enabled services” where the exporter is “registered with and duly certified by the Pakistan Software Export Board (PSEB)”. The other clauses cover:

• (b) services or technical services rendered outside Pakistan or exported from Pakistan;
• (c) royalty, commission or fees derived by a resident company from a foreign enterprise for the use outside Pakistan of patents, designs, secret processes, know-how and similar rights;
• (d) construction contracts executed outside Pakistan;
• (da) foreign commission due to an indenting commission agent;
• (e) other services rendered outside Pakistan as notified by the Board.

Division IVA of Part III of the First Schedule then sets the rates:

S. No.	Type of receipt	Rate of tax
1	Export proceeds of computer software or IT services or IT enabled services by persons registered with Pakistan Software Export Board	0.25% of proceeds for tax years 2024 up to tax year 2029
2	Any other case	1% of proceeds

How does it work in practice?

The 0.25% row has two requirements built into it: the proceeds must be for software, IT services or IT-enabled services, and the exporter must be registered with PSEB. Section 154A(1)(a) adds that the exporter must be “duly certified” as well as registered. If either requirement is missing, the receipt falls into row 2.

Row 2 is a catch-all. It applies at 1% to everything else section 154A reaches: an IT exporter without PSEB registration, a consulting firm exporting technical services, a company receiving royalties or fees from a foreign enterprise, and the other clauses listed above.

The Ordinance does not create a separate clause for an unregistered IT exporter. Clause (a) is limited to registered exporters, and clause (b) covers services exported from Pakistan in general terms. Whichever clause a reader places the receipt under, the rate that results from Division IVA for an unregistered exporter is the row 2 rate of 1%.

Worked example (illustrative figures)

Two Islamabad companies each realise foreign proceeds of Rs. 18,000,000 in tax year 2027 for web development work for clients in Canada.

Pixelgrid (Pvt) Ltd, registered and certified with PSEB:

1. Row 1 applies: 0.25% of proceeds.
2. Tax deducted: Rs. 18,000,000 x 0.25% = Rs. 45,000.

Margalla Web (Pvt) Ltd, not registered with PSEB:

1. Row 2 applies: 1% of proceeds.
2. Tax deducted: Rs. 18,000,000 x 1% = Rs. 180,000.

The unregistered company bears Rs. 180,000 - Rs. 45,000 = Rs. 135,000 more on the same revenue.

What if our registration lapses partway through the year?

The law is silent on this. Section 154A(1) ties the deduction to “the time of realization of foreign exchange proceeds”, and clause (a) describes an exporter who is registered and certified. Neither section 154A nor Division IVA says whether status is tested payment by payment, at the start of the tax year, or otherwise, and neither says what happens to proceeds realised after a lapse. This page does not resolve that question. The PSEB’s own renewal rules and any bank procedure prescribed under section 154A(5) are outside this corpus.

What if we register partway through the year?

The same silence applies in reverse. The text does not say whether proceeds realised before registration can later be treated under row 1. Nothing in section 154A or Division IVA provides for that.

What if we export services that are not IT or IT-enabled?

Row 1 is limited to computer software, IT services and IT-enabled services, as defined in clauses (30AD) and (30AE) of section 2. Other exported services go to row 2 at 1%, even for a company that is registered with PSEB for its IT work.

Common mistakes

• Treating PSEB registration as optional for the 0.25% rate. Row 1 of Division IVA refers to persons registered with PSEB. Without registration, row 2 applies.
• Assuming registration alone is enough. Section 154A(1)(a) says “registered with and duly certified by” PSEB.
• Assuming the lower rate is permanent. Row 1 runs “for tax years 2024 up to tax year 2029”. Section 74 counts a tax year as the twelve months to 30 June, named by the year in which that date falls.

What to check in the official text

Read section 154A(1) clause by clause, then the Division IVA table in the official PDF of the Ordinance. The site text leaves tables out. Check whether the Board has notified any service under section 154A(1)(e) or excluded any service under section 154A(6); no such notification is held in this corpus. PSEB’s registration and certification rules are also outside this corpus.