To stimulate investment in the IT sector, the federal government has agreed to lower tax rates on investments in the field, provide tax incentives to independent contractors, and normalise duty-free goods.
The 0.25 percent deferred income tax rate should continue to be in place for the following three years, according to a proposal made by Finance Minister Ishaq Dar Friday in today’s budget presentation for 2023–24.
Dar argued that banks should be given a reduced tax rate of 20% to help with lending on investments in the IT sector, pointing out that the existing standard tax rate on banks for investment is currently 39 percent. Dar recognised the country’s immense expertise in the field of information technology.
The government has suggested providing duty-free goods in the field to promote investment in the IT sector, the finance minister added. He advocated giving the sector the status of a small or medium-sized business (SME) so that people might benefit from the discounted income tax rates that are unique and only available to this sector.
Dar suggested a reduction in GST from 15% to 5% for IT and ITeS services in Islamabad (ICT) for exporters of IT/IT-related services as well as the issuance of Automated Exemption Certificates to non-residents within 30 days.
For individuals to take advantage of the 0.25 percent concessional rate, the minister suggested getting rid of the necessity that they file a sales tax return. “Young people in Pakistan work from home as independent contractors, bringing crucial foreign exchange into the country,” the minister continued.
If an individual’s exports of IT and IT-enabled services in the preceding fiscal year were less than $24,000, Dar proposed that they be exempt from sales tax registration and file a single-page simplified income tax return.