P@SHA Urges Govt to Announce Tax-Free Incentives for IT Industry in FY26 Budget

The Pakistan Software Houses Association (P@SHA) has urged the government to announce a comprehensive, tax-friendly package for the IT industry in the upcoming federal budget on June 10. Speaking to the media, P@SHA Chairman Sajjad Mustafa Syed said that out of the total $700 million investment in Pakistan’s IT sector, $600 million is from P@SHA member companies. He stressed that continued growth requires stability, incentives, and protection. Chairman P@SHA demanded a tax-free budget for the IT sector, with no new taxes. He called for a 10-year fixed tax regime (FTR) to be implemented from 2025 to 2035 and formally announced in Budget 2025-26. He also demanded that companies registered with the Pakistan Software Export Board (PSEB) continue to be subject to only 0.25 percent withholding tax beyond 2026 under the fixed tax system. Syed raised concerns over tax inequality, noting that remote IT workers are taxed at a maximum of 1 percent, while salaried IT employees face income tax rates of up to 35 percent. He urged the government to equalize tax treatment between employees and freelancers in the sector. He emphasized the need to facilitate the movement of foreign currency revenues and warned that without consistent, long-term policies, Pakistan will struggle to attract foreign direct investment in IT. If business-friendly measures are not introduced, jobs of 600,000 IT professionals could be at risk, he added.