Govt Announces Tax Relief for Freelancers, IT Sector and Bank Loans

The federal government has decided to reduce tax rates on investments in the IT sector, offer tax breaks to freelancers, and normalize duty-free equipment to encourage investment in this sector.

In today’s budget 2023–24 presentation, Finance Minister Ishaq Dar Friday also proposed the 0.25 percent discounted income tax rate remains in effect for the next three years in order to encourage IT exports in the country.

Dar recognized the country’s enormous talent in the field of information technology and advocated that banks be provided a lower tax rate of 20 percent to assist lending on investments in the IT sector, recalling that the current standard tax rate on banks for investment is 39 percent.

The finance minister further informed that the government has recommended offering Duty-Free Equipment in the field to encourage investment in the IT sector. He recommended granting the industry the status of SMEs so that individuals may enjoy the benefit of discounted income tax rates that are special and exclusive to this field.

For IT/IT-related services exporters, Dar proposed to issue Automated Exemption Certificates to non-residents within 30 days, plus a reduction in GST from 15 percent to 5 percent for IT and ITeS services in Islamabad (ICT).

The minister recommended removing the requirement of filing a sales tax return for individuals in order to benefit from the 0.25 percent concessional rate. “Pakistan’s youth work from home as freelancers, bringing vital foreign exchange into the country”, the minister added.

Dar suggested that such individuals be excused from sales tax registration and file a simplified single-page income tax return if their IT and IT-enabled services exports were less than $24,000 in the previous fiscal year.

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