Has the 0.25% tax on IT export proceeds been extended after Budget 2026-27, and until when?

The reduced rate for registered IT exporters did not expire with tax year 2026. The Finance Act, 2026, which gave legal effect to the 2026-27 budget, amended one figure in the First Schedule to the Income Tax Ordinance, 2001, and that change carries the 0.25% rate forward three more tax years.

What does the law say?

Section 154A(1) of the Ordinance requires the bank that realises foreign exchange proceeds to deduct tax at the rates in Division IVA of Part III of the First Schedule. Before the Finance Act, 2026, row 1 of that table gave 0.25% of proceeds to software, IT and IT-enabled exporters registered with the Pakistan Software Export Board (PSEB) “for tax years 2024 up to tax year 2026”.

Section 5 of the Finance Act, 2026 amends the Ordinance. In its First Schedule amendments, under Part III, it provides: “in Division IVA, in the Table, in column (1), in S. No. (1), in the entry in column (3), for the figure “2026”, the figure “2029” shall be substituted”.

The consolidated Ordinance, as amended up to 30 June 2026, now reads:

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

The footnotes to that table in the official Ordinance record that the time-limited expression was added by the Finance Act, 2023, and that the figure “2026” was substituted by the Finance Act, 2026.

Section 1(2) of the Finance Act, 2026 says the Act comes into force on the first day of July 2026, unless otherwise provided.

Which income periods does that cover?

Section 74(1) defines the normal tax year as twelve months ending on 30 June, named by the calendar year in which that date falls. Applied to row 1:

Tax year	Period
2024	1 July 2023 to 30 June 2024
2025	1 July 2024 to 30 June 2025
2026	1 July 2025 to 30 June 2026
2027	1 July 2026 to 30 June 2027
2028	1 July 2027 to 30 June 2028
2029	1 July 2028 to 30 June 2029

The last three rows are the ones added by the Finance Act, 2026. A company that has been granted a special tax year under section 74(2) will need to map its own year onto these tax years.

How does it work in practice?

Nothing changes in how the tax is collected. The bank still deducts at the time of realisation. What the amendment secures is that a PSEB-registered exporter’s proceeds realised after 1 July 2026 continue to attract 0.25% rather than falling to the 1% “any other case” row.

Worked example (illustrative figures)

Indus Stack (Pvt) Ltd, a PSEB-registered software house in Karachi, realises foreign proceeds of Rs. 32,000,000 in tax year 2027.

1. Tax year 2027 is within “tax years 2024 up to tax year 2029”, so row 1 applies.
2. Tax deducted: Rs. 32,000,000 x 0.25% = Rs. 80,000.
3. Without the extension, row 1 would have ended with tax year 2026, and the same proceeds under row 2 would have given Rs. 32,000,000 x 1% = Rs. 320,000.
4. Difference: Rs. 320,000 - Rs. 80,000 = Rs. 240,000.

What if we are not registered with PSEB?

The extension does not help. It changes only the period in row 1, which applies to persons registered with PSEB. Section 154A(1)(a) also requires the exporter to be registered with and duly certified by PSEB. Other exporters remain at 1% of proceeds under row 2.

What if we are looking at tax year 2030?

The table as currently printed stops at tax year 2029. It does not provide a 0.25% rate beyond that. Any further change would need a later amendment, and none is in this corpus.

Common mistakes

• Reading “2029” as the calendar year 2029. It is tax year 2029, which ends on 30 June 2029.
• Assuming the rate for everyone changed. Only the period in row 1 was amended. The 1% rate in row 2 is untouched by this amendment.
• Assuming the extension changes the final-tax conditions. Those are in section 154A(2) and (3), which this amendment does not touch.

What to check in the official text

Read section 5 of the Finance Act, 2026, in the part amending Part III of the First Schedule, and compare it against the Division IVA table in the official PDF of the Ordinance amended up to 30 June 2026. The Finance Act text on this site was transcribed from scanned page images, so check the figures against the official PDF before relying on them.