Is the section 65F 100% tax credit and its 80% remittance condition still available to IT exporters?

The 100% tax credit on IT export income under section 65F is not available to an ordinary software house in the Ordinance as it stands. The clause that gave it was removed by the Finance Act, 2022, and IT export income has since been taxed through the bank deduction under section 154A.

What does the law say now?

Section 65F(1) of the Income Tax Ordinance, 2001, as amended up to 30 June 2026, allows certain persons or incomes “a tax credit equal to one hundred per cent of the tax payable under any provisions of this Ordinance including minimum, alternate corporate tax and final taxes”. Only two clauses remain:

Clause	Who gets the credit
(a)	Persons engaged in coal mining projects in Sindh, to the extent the income is derived from supplying coal to power generation projects
(b)	A startup, for the tax year in which it is certified by the Pakistan Software Export Board and the next following two tax years

An Explanation to the section confirms that the credit under clause (a) is only for income from coal mining operations in Sindh supplying power projects. Neither clause mentions exports of software, IT services or IT-enabled services.

Section 65F(2) adds conditions for the remaining clauses: the return has been filed, withholding tax statements have been filed where the person is a withholding agent, and sales tax returns have been filed where required.

What happened to the IT export credit?

Section 5 of the Finance Act, 2022 amended the Ordinance with the words: “in section 65F, in sub-section (1), clause (c) shall be omitted;”. The footnote in the official consolidated Ordinance records what clause (c) said before it was omitted. It covered income from exports of computer software or IT services or IT-enabled services “upto the period ending on the 30th day of June, 2025”, with a proviso that “eighty percent of the export proceeds is brought into Pakistan in foreign exchange remitted from outside Pakistan through normal banking channels.”

So the 80% remittance condition people still quote belonged to a clause that no longer exists. Its own end date, 30 June 2025, has also passed.

How are IT exports taxed instead?

The same section of the Finance Act, 2022 also changed section 154A. Clause (a) of section 154A(1) had applied to IT exports “in case tax credit under section 65F is not available”. The Finance Act, 2022 replaced that expression with “where the exporter is registered with and duly certified by the Pakistan Software Export Board (PSEB).”

Section 154A now requires the bank to deduct tax from IT export proceeds at the rates in Division IVA of Part III of the First Schedule:

Type of receipt	Rate of tax
Export proceeds of computer software, IT services or IT-enabled services by persons registered with PSEB	0.25% of proceeds for tax years 2024 up to tax year 2029
Any other case	1% of proceeds

Worked example (illustrative figures)

Karakoram Cloud (Pvt) Ltd in Peshawar is PSEB-registered, was not certified as a startup, and realises export proceeds of Rs. 25,000,000 in tax year 2027. Its owner believes the company owes nothing because of a 100% credit.

1. Section 65F(1) has no clause covering IT export income, so no credit applies.
2. Section 154A applies instead. The company is PSEB-registered, so row 1 of Division IVA applies.
3. Tax deducted by the bank: Rs. 25,000,000 x 0.25% = Rs. 62,500.

If the company were a PSEB-certified startup within its credit period under clause (b), the position would be different, and that credit is covered on a separate page.

What if older guides still mention the 65F credit?

Guides written before the Finance Act, 2022 may describe clause (c) correctly for its time. The consolidated Ordinance amended up to 30 June 2026 no longer contains it. For past tax years, the text in force for that year governs, and this page does not work through earlier years.

Common mistakes

• Assuming the credit runs to June 2025 because the old clause said so. The clause was omitted by the Finance Act, 2022 before that date arrived.
• Treating the 80% remittance rule as a current condition. It was a proviso to the omitted clause (c). The current section 154A conditions are about filing the return and withholding statements.
• Confusing the startup credit with an IT export credit. Clause (b) is limited to startups certified by PSEB, and only for three tax years in total.

What to check in the official text

Read section 65F and its footnotes in the official PDF of the Ordinance amended up to 30 June 2026, and section 5 of the Finance Act, 2022 for the omission of clause (c) and the change to section 154A. In the text on this site, the footnote quoting the omitted clause appears alongside section 65G because of how the PDF was laid out.