# Is the 0.25% tax on IT exports only for PSEB-registered companies, and what is the rate if we are not registered or our registration lapses?

Source: https://qanoondigest.com/faq/software-houses/it-export-rate-without-pseb-registration
Law current to: 30 June 2026. Reviewed: 2026-09-25. Checked line by line against the law: not yet.

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## Short answer

Yes. Row 1 of Division IVA gives 0.25% of proceeds only to software, IT and IT-enabled exporters registered with the Pakistan Software Export Board, and section 154A(1)(a) requires registration and certification. Every other case under section 154A, including other services, royalties and fees, is 1% of proceeds. The Ordinance does not say how a mid-year lapse is handled.

**Applies to:** IT companies and software houses in Pakistan exporting software, IT or IT-enabled services that are not registered with PSEB, or whose registration has expired.

Registration with the Pakistan Software Export Board (PSEB) is what separates the two rates in Division IVA. A software house that is registered can have 0.25% deducted from its IT export proceeds. One that is not falls into the "any other case" row, where the rate is 1%, four times the registered rate.

## What does the law say?

Section 154A(1) lists the foreign exchange proceeds from which a bank must deduct tax. Clause (a) covers "exports of computer software or IT services or IT enabled services" where the exporter is "registered with and duly certified by the Pakistan Software Export Board (PSEB)". The other clauses cover:

- (b) services or technical services rendered outside Pakistan or exported from Pakistan;
- (c) royalty, commission or fees derived by a resident company from a foreign enterprise for the use outside Pakistan of patents, designs, secret processes, know-how and similar rights;
- (d) construction contracts executed outside Pakistan;
- (da) foreign commission due to an indenting commission agent;
- (e) other services rendered outside Pakistan as notified by the Board.

Division IVA of Part III of the First Schedule then sets the rates:

| 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 |

## How does it work in practice?

The 0.25% row has two requirements built into it: the proceeds must be for software, IT services or IT-enabled services, and the exporter must be registered with PSEB. Section 154A(1)(a) adds that the exporter must be "duly certified" as well as registered. If either requirement is missing, the receipt falls into row 2.

Row 2 is a catch-all. It applies at 1% to everything else section 154A reaches: an IT exporter without PSEB registration, a consulting firm exporting technical services, a company receiving royalties or fees from a foreign enterprise, and the other clauses listed above.

The Ordinance does not create a separate clause for an unregistered IT exporter. Clause (a) is limited to registered exporters, and clause (b) covers services exported from Pakistan in general terms. Whichever clause a reader places the receipt under, the rate that results from Division IVA for an unregistered exporter is the row 2 rate of 1%.

## Worked example (illustrative figures)

Two Islamabad companies each realise foreign proceeds of Rs. 18,000,000 in tax year 2027 for web development work for clients in Canada.

**Pixelgrid (Pvt) Ltd, registered and certified with PSEB:**

1. Row 1 applies: 0.25% of proceeds.
2. Tax deducted: Rs. 18,000,000 x 0.25% = Rs. 45,000.

**Margalla Web (Pvt) Ltd, not registered with PSEB:**

1. Row 2 applies: 1% of proceeds.
2. Tax deducted: Rs. 18,000,000 x 1% = Rs. 180,000.

The unregistered company bears Rs. 180,000 - Rs. 45,000 = Rs. 135,000 more on the same revenue.

## What if our registration lapses partway through the year?

The law is silent on this. Section 154A(1) ties the deduction to "the time of realization of foreign exchange proceeds", and clause (a) describes an exporter who is registered and certified. Neither section 154A nor Division IVA says whether status is tested payment by payment, at the start of the tax year, or otherwise, and neither says what happens to proceeds realised after a lapse. This page does not resolve that question. The PSEB's own renewal rules and any bank procedure prescribed under section 154A(5) are outside this corpus.

## What if we register partway through the year?

The same silence applies in reverse. The text does not say whether proceeds realised before registration can later be treated under row 1. Nothing in section 154A or Division IVA provides for that.

## What if we export services that are not IT or IT-enabled?

Row 1 is limited to computer software, IT services and IT-enabled services, as defined in clauses (30AD) and (30AE) of section 2. Other exported services go to row 2 at 1%, even for a company that is registered with PSEB for its IT work.

## Common mistakes

- **Treating PSEB registration as optional for the 0.25% rate.** Row 1 of Division IVA refers to persons registered with PSEB. Without registration, row 2 applies.
- **Assuming registration alone is enough.** Section 154A(1)(a) says "registered with and duly certified by" PSEB.
- **Assuming the lower rate is permanent.** Row 1 runs "for tax years 2024 up to tax year 2029". Section 74 counts a tax year as the twelve months to 30 June, named by the year in which that date falls.

## What to check in the official text

Read section 154A(1) clause by clause, then the Division IVA table in the official PDF of the Ordinance. The site text leaves tables out. Check whether the Board has notified any service under section 154A(1)(e) or excluded any service under section 154A(6); no such notification is held in this corpus. PSEB's registration and certification rules are also outside this corpus.

## Frequently asked

### What rate applies if our software house is not registered with PSEB?

Division IVA has only two rows. Row 1, at 0.25%, covers persons registered with the Pakistan Software Export Board. Row 2 covers any other case at 1% of proceeds, so an unregistered exporter falls under the 1% row.

### What happens if our PSEB registration lapses in the middle of the year?

The Ordinance does not say. Section 154A requires the bank to deduct at the time of realisation of proceeds, and clause (a) refers to an exporter who is registered and certified, but no provision in this corpus deals with a registration that expires partway through a tax year.

### Does registration help with the sales tax return condition too?

Yes. The proviso to section 154A(2)(c) says the sales tax return condition for final taxation does not apply to an exporter mentioned in clause (a) of sub-section (1), which is the PSEB-registered and certified IT exporter.

## Citations

- [Income Tax Ordinance, 2001, section 154A (Export of Services)](https://qanoondigest.com/ordinances/income-tax-ordinance-2001/income-tax-ordinance-2001-2026-06-30#154a-export-of-services), as amended to 2026-06-30: "registered with and duly certified by the Pakistan Software Export Board (PSEB)" Official source: https://download1.fbr.gov.pk/Docs/2026724177725705IncomeTaxOrdinanace2001.pdf
- [Income Tax Ordinance, 2001, First Schedule, Part III, Division IVA (Export of Services)](https://qanoondigest.com/ordinances/income-tax-ordinance-2001/income-tax-ordinance-2001-2026-06-30), as amended to 2026-06-30 Official source: https://download1.fbr.gov.pk/Docs/2026724177725705IncomeTaxOrdinanace2001.pdf
- [Income Tax Ordinance, 2001, section 2 (Definitions)](https://qanoondigest.com/ordinances/income-tax-ordinance-2001/income-tax-ordinance-2001-2026-06-30#2-definitions), as amended to 2026-06-30: "software development, software maintenance, system integration, web design, web development, web hosting and network design" Official source: https://download1.fbr.gov.pk/Docs/2026724177725705IncomeTaxOrdinanace2001.pdf
- [Income Tax Ordinance, 2001, section 74 (Tax year)](https://qanoondigest.com/ordinances/income-tax-ordinance-2001/income-tax-ordinance-2001-2026-06-30#74-tax-year), as amended to 2026-06-30: "be denoted by the calendar year in which the said date falls" Official source: https://download1.fbr.gov.pk/Docs/2026724177725705IncomeTaxOrdinanace2001.pdf