Govt. gave Tax Relief to Boost Freelancing and IT Sectors

In a recent announcement, the federal government of Pakistan has revealed a series of initiatives aimed at promoting growth and investment in the freelancing and information technology (IT) sectors. The measures include tax rate reductions, tax breaks for freelancers, and the facilitation of duty-free equipment provisions.

In the budget unveiling for the 2023-24 financial year, Finance Minister Ishaq Dar highlighted the importance of the IT industry and the abundance of skilled individuals in the nation. To support the growth of IT exports, the government plans to extend the current discounted income tax rate of 0.25% for the next three years.

Recognizing Pakistan’s immense potential in the field of information technology, Minister Dar proposed a lower tax rate of 20% for banks to encourage lending for investments in the IT sector. Currently, banks are subject to a standard tax rate of 39% for such investments.

Furthermore, the government aims to foster an environment conducive to investment in the IT sector by recommending the provision of Duty-Free Equipment. Granting the industry the status of Small and Medium Enterprises (SMEs), individuals would benefit from discounted income tax rates exclusive to the IT sector.

In an effort to support IT and IT-related services exporters, Minister Dar suggested the issuance of Automated Exemption Certificates to non-residents within 30 days. Additionally, a reduction in the Goods and Services Tax (GST) from 15% to 5% for IT and IT-enabled services in Islamabad Capital Territory (ICT) was proposed.

Recognizing the significant contributions of the freelancing community to the country’s foreign exchange earnings, Minister Dar recommended exempting individuals from filing a sales tax return in order to avail themselves of the concessional tax rate of 0.25%. In addition, independent contractors who exported IT and IT-enabled services worth less than $24,000 in the preceding financial year would be exempt from sales tax registration requirements.

These measures reflect the government’s commitment to promoting the growth and potential of the freelancing and IT sectors in Pakistan. By providing tax incentives, facilitating investment, and easing administrative burdens, the government aims to create a favorable environment for freelancers and IT entrepreneurs, thereby driving economic growth and technological advancement in the country.