Income Tax Treatment for IT Companies for Tax Year 2023

Option 1

The deduction of WHT on receipts of IT Exports considered as Final Tax Regime for tax treatment if the conditions mentioned in Section 154(2) of ITO, 2001 fulfilled.

Rate of Taxes

0.25% for those registered with PSEB

1% for those un-registered with PSEB

Conditions:

(a) return has been filed
(b) withholding tax statements for the relevant tax year have been filed if
required under the Ordinance a
(c) sales tax returns under Federal or Provincial laws have been filed, if
required under the law

(d) no credit for foreign taxes paid shall be allowed

Option 2

The deduction of WHT on receipts of IT Exports considered as Normal Income for Tax treatment if the conditions mentioned in Section 154(2) of ITO, 2001 remained pending.

Impact:

If the amount falls below the taxable limit then the full fill the conditions for taxpayer is unnecessary but if the amount is taxable then the impact is quite huge. As the 0.25% wht considered as an adjustable income tax and treatment of taxable income falls under Normal Tax Regime.