IT & IT-Enabled Services 0.25% Tax Rate Extended to 2029
Long-term certainty for the tech sector
The Federal Budget 2026-27 has extended the reduced 0.25% tax rate for IT and IT-enabled services (ITeS) exporters from 2026 to Tax Year 2029. For a sector that competes globally and plans on multi-year horizons, this extension is exactly the kind of predictability that supports investment and hiring.
What the 0.25% rate covers
The concessional rate applies to exporters of IT services and IT-enabled services — software development, technical support, business process outsourcing, design, data services and similar offerings sold to clients abroad. Instead of a higher general rate, qualifying exporters benefit from the deeply reduced 0.25% treatment on their export earnings.
Why the extension matters
- Multi-year planning. Firms can sign long contracts and forecast margins to 2029 with confidence.
- Investor signal. A stable, low rate makes Pakistan more attractive for tech investment.
- Talent retention. Predictable economics help companies commit to hiring and training.
A simple illustration
Consider an IT exporter earning Rs 100,000,000 in qualifying export revenue.
- At the concessional 0.25%, the relevant charge is Rs 250,000.
- Compared with a higher general rate, the saving frees significant cash to reinvest in product, people and infrastructure.
The exact figures depend on each company's structure, but the direction is clear: the sector keeps more of what it earns.
Conditions still apply
Concessional treatment comes with compliance expectations — registration, routing proceeds through formal banking channels and accurate reporting. Keep your export documentation and payroll records clean so you can claim the rate without friction. The extension is a privilege worth protecting through good housekeeping.
A growing, formal sector
Extending the rate to 2029 signals confidence in IT exports as a pillar of foreign-exchange earnings. As tech firms scale, their payroll, contractor payments and withholding obligations grow with them — and that is where disciplined systems pay off.
How Zaffre supports tech exporters
Zaffre Axon from Zaffre Tech is built by a technology company that understands the IT sector's pace. The Zaffre HRM module auto-applies salary slabs, allowance taxability and EOBI across a growing engineering team, while Zaffretech finance tooling tracks withholding on contractor and vendor invoices. Configured centrally on Zaffreaxon and aligned to current FBR rates, it keeps fast-scaling IT firms compliant so founders can focus on winning export clients, not reconciling spreadsheets.
References: Finance Act 2026 (Federal Budget 2026-27); Income Tax Ordinance 2001; FBR IT and ITeS export concessions.
Book a demo
See how Zaffre Axon keeps a scaling tech team compliant under the extended IT concession. Book a demo with Zaffre Tech.