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Policy wins & budget outcomes
P@SHA's Policy & Government Affairs team represents the IT industry before the Ministry of Finance, FBR, the State Bank, PTA, MoITT, and Pakistan's international partners. This portal tracks what has been secured, what is in motion, and where members can engage.
From the three-year extension of the 0.25% FTR rate to the whitelisting of IP addresses for 350+ member companies, P@SHA's engagement has produced concrete regulatory and fiscal outcomes.
An active tracker of unresolved matters with the State Bank of Pakistan, covering purpose codes, Form R implementation, remittance documentation, and banking facilitation for exporters.
Publications in progress include the State of the IT Industry Report, an AI adoption benchmarking study for Pakistan and peer economies, and market entry frameworks for Africa, Australia and New Zealand, and the Nordics.
Two new initiatives for Q3 2026: a legislative monitoring tool giving members real-time alerts on bills and regulatory changes, and a structured investment pathway connecting Pakistani IT companies with the US DFC.
The Finance Bill 2026-27 is a positive budget for Pakistan's IT sector. The government acted on the most critical near-term asks in P@SHA's pre-budget recommendations. The structural investment agenda now moves to the next cycle.
Extended under Section 154A from TY 2026 to TY 2029. Companies bidding on multi-year outsourcing contracts can now answer the question every serious client asks: what will the tax position be in year three?
The Section 236Y tax on payments abroad via Pakistani bank-issued cards drops from 5% to 0.5%, directly cutting the cost of cloud infrastructure, SaaS tools, and international subscriptions for IT companies.
Under Clause 43F, qualifying startups now receive 100% of customer payments immediately, with no cash held in 6 to 12 month refund cycles. A structural fix to the working capital crisis facing early-stage SaaS, Fintech, and B2B companies.
The surcharge is withdrawn, the 35% top-rate threshold rises from Rs. 4.1M to Rs. 7M, and new intermediate brackets cut liability across the board, improving talent retention at zero cost to employers.
Income below Rs. 500M is now fully exempt from super tax, up from Rs. 150M, and the rate above the threshold falls from 10% to 8%. The large majority of IT companies pay no super tax at all.
Removes what was widely perceived as a penalty on overseas earnings for the diaspora, founders, and senior professionals with international financial exposure.
The PM's Youth Skills Development Programme targets 120,000 youth for IT and digital skills, part of over Rs. 10 billion committed across skills, education, and AI programmes including AI Seekho 2026.
Customs duty on submarine cable landing equipment reduced to zero, advance tax on SIM card sales eliminated, and zero-rating for mobile phone components, strengthening the connectivity layer the export sector runs on.
The Bill introduces new requirements alongside the reliefs. Member companies should prepare ahead of Tax Year 2026.
| New obligation | Impact on IT companies |
|---|---|
| Digital financial statements required from TY 2026 | Filing must be in CSV, XLSX, or XML format. PDFs are no longer accepted. |
| E-invoicing integration penalties increased | Rs. 1M for a first integration default, Rs. 5M for subsequent defaults. |
| ATL late filing surcharge raised to Rs. 100,000 | A five-fold increase from Rs. 20,000. Finance teams must track deadlines closely. |
| Social media income WHT at 5% minimum | Individuals monetizing online content face a new deduction at the banking stage. |
| Banking data reporting for accounts above Rs. 100M | Large firms must ensure banking activity aligns with declared revenue. |
| Faceless audit and algorithmic settlement | A new dispute resolution pathway; advisors needed to navigate settlement offers. |
Formally proposed in P@SHA's pre-budget recommendations and carried forward for the next budget cycle.
Introduce a legislative distinction under Section 154A so full-time remote employees of foreign companies are not classified identically to independent freelancers. The current take-home pay arbitrage of 22 to 44 percent is draining senior talent from organized IT firms.
Convert the 0.25% FTR rate into a permanent statutory benefit. A three-year extension protects current contracts but does not give clients and investors the 5 to 10 year visibility they need.
Fiscal transparency for fund structures, Clause 99 exemption reform, and foreign LP relief from withholding and double taxation, so venture capital can domicile in Pakistan rather than Cayman, UAE, or Singapore.
The threshold was set in 2017 when Rs. 100M equated to roughly $1M. Rupee devaluation means the real threshold is now less than a third of its original value.
Simplify criteria so early-stage IT and ITES companies can access the concessionary rate without complex eligibility barriers.
Allow FBR to issue exemption certificates so the same transaction is not withheld twice, once on telecom expense and again on export or corporate receipts.
Outcomes secured through P@SHA's engagement with federal ministries, regulators, and parliament, grouped by the fronts where the industry's operating environment is decided.
P@SHA's Federal Budget 2026-27 Policy Recommendations (April 2026) put six formal interventions before the FBR, Ministry of Finance, and MoITT. Where each one stands after the Finance Bill:
Recommended: extend the FTR under Section 154A for a minimum of 5 years, preferably 10. Delivered: extended through Tax Year 2029, three years of policy certainty. The push to convert this into a permanent statutory benefit continues into the 2029 review cycle.
Recommended: a dedicated PKR 5 billion federal allocation for national digital skills programs. Delivered: Rs. 5.29B for digital skills targeting 120,000 youth, within over Rs. 10B committed across skills, education, and AI. P@SHA is now pursuing the joint industry governance and outcomes-based funding design it proposed.
Recommended: a Category A / Category B distinction under Section 154A with graduated rates, closing a 22 to 44 percent take-home pay arbitrage draining senior talent from organized IT firms. The Bill extended the rate uniformly. This remains P@SHA's top ask for the next cycle.
Recommended: pass-through treatment for licensed VC/PE funds, capital gains exemption for 3+ year holds in PSEB-registered companies, and repatriation guarantees. Not included in the Bill; the most consequential omission given VC investment fell from $366M in 2021 to $22.5M in 2024.
Recommended: minimum allocation thresholds for locally developed software and hardware in federal and provincial procurement, with phased implementation. Not taken up in this Bill; advocacy continues with MoITT and PSEB.
Recommended: a unified 5% rate, single registration, and single-portal filing through the CCI or National Tax Council. A federal-provincial matter beyond the Finance Bill alone; P@SHA continues to pursue the coordination mechanism.
Delivered in the Finance Bill following P@SHA's wider budget engagement: Standing Committee testimony, consolidated industry feedback through FPCCI and the Ministry of Finance, and the post-budget anomaly process.
Direct cost relief on every payment for cloud, tools, and SaaS made through Pakistani bank-issued cards.
Ends the refund-cycle working capital squeeze for qualifying early-stage companies.
Surcharge abolished and thresholds restructured, improving talent retention at zero cost to employers.
A company earning Rs. 200M that previously paid Rs. 5M in super tax now pays nothing, freeing capital for reinvestment.
Eliminates a friction point affecting founders' and professionals' decisions about where to domicile assets.
Covers hardware, software, and installation costs, incentivizing the digital compliance infrastructure the sector needs.
WHT on IT services held at the preferential 4% rate, and the Section 65F technology tax credit continued into the new fiscal year. Defending existing benefits through each budget cycle is as much a part of advocacy as winning new ones.
Secured through engagement with PTA, including Senate hearings, industry-wide surveys, and direct facilitation for affected members.
Restored reliable connectivity for hundreds of exporting firms during a period of network disruption.
Whitelisting of 20 VPNs alongside case-by-case resolution and facilitation for member companies, a member webinar on the whitelisting process, and the Chairman's testimony before the Senate.
P@SHA put the industry's position on record on connectivity disruptions and their export impact.
Secured through P@SHA's standing engagement with the State Bank of Pakistan on facilitation for IT and ITES exporters.
Expanded room for Pakistani IT companies to invest in and operate international subsidiaries.
SBP's 2026 instructions raised the Form R threshold above USD 25,000 and removed the per-transaction requirement, following sustained industry feedback on documentation burden. Bank-level implementation is being tracked in Live Issues.
Industry-proposed vendors added, easing routine payments for international services.
A consolidated industry requirement set for digital and online banking facilitation, now with the regulator.
Secured through P@SHA's tariff proposals to the Ministry of Commerce.
P@SHA's Export Development Fund proposal, developed and delivered through direct engagement with the Ministry.
Including Rs. 5.29B for digital skills targeting 120,000 youth and the AI Seekho 2026 programme, a meaningful increase in public investment in the sector's talent pipeline.
Case-by-case resolution of regulatory matters for individual member companies, from EOBI to PTA to banking, is a standing part of the policy team's work. Recent EOBI resolutions, in members' own words:
"On behalf of PaysysLabs Private Limited, we would like to appreciate P@SHA for its timely and valuable support in facilitating our recent EOBI-related issue. Their guidance, coordination, and prompt response helped us move the matter forward efficiently."
"We sincerely appreciate P@SHA's prompt response and proactive support in our EOBI matter. Their timely guidance and coordination reflect their strong commitment to serving member companies."
Projects, research papers, and consultations across national and international stakeholders. Filter by category or status.
| Item | Counterpart / Partner |
|---|
An AI-assisted platform tracking bills, gazette notifications, standing committee sessions, and regulatory changes relevant to the IT sector, delivering real-time alerts to P@SHA members.
A structured pathway connecting Pakistani IT companies with the US International Development Finance Corporation, covering instrument mapping, investment-readiness, and a curated pipeline of flagship company profiles.
Research in the pipeline from P@SHA's policy and research teams.
| Publication | Expected |
|---|---|
| From Digital Readiness to AI Adoption: A Regional Benchmarking Report for Pakistan and Peer Economies | Jul–Sep 2026 |
| Pakistan IT Exports to Africa: A Market Entry Framework | Jul–Aug 2026 |
| Australia and New Zealand Digital Services Opportunities Report | Aug 2026 |
| Scaling Pakistan's IT Exports from $3.8B to $15B: Critical Bottlenecks in Market Access, Infrastructure, Policy, and Skills | Sep–Oct 2026 |
| Catalyzing IT Sector Growth in Pakistan's Second-Tier Cities | Sep 2026 |
| State of the IT Industry Report | Nov 2026 |
| Salary Survey Report 2026 | Nov 2026 |
| Scandinavian Opportunities Report | Nov 2026 |
| Skills Development Report 2026 | Dec 2026 |
Matters P@SHA is actively pursuing with the State Bank on behalf of the industry. Member-specific cases are shown in anonymized form. To raise a banking or regulatory issue affecting your company, write to the policy team.
Government policies and regulatory instruments currently open for industry input. P@SHA consolidates member feedback into formal submissions. Your input goes directly to the Policy & Government Affairs team.
The draft Digital Governance Policy is currently under government review. P@SHA is collecting member input to consolidate into the industry's formal submission. Use the form below to contribute your company's position.
P@SHA's own publications alongside the laws, bills, and regulatory instruments that govern Pakistan's IT sector.
50 laws, bills, rules, and regulatory instruments across 10 institutions. Filter by institution; every entry links to the official source.