Section 65F: what actually happened to the IT export tax credit

The section 65F tax credit for exports of computer software, IT services and IT enabled services no longer exists, and it did not lapse in 2026. The clause that carried it, section 65F(1)(c) of the Income Tax Ordinance 2001, was omitted by the Finance Act 2022. If you have read that you should claim it before it expires on 30 June 2026, that advice is wrong twice over, and this page shows you the statutory text that settles it.

This matters because the claim is repeated widely, including by sites aimed squarely at freelancers and IT exporters. If you want the return itself prepared rather than the law explained, that is our income tax filing service.

What the circulating claim gets wrong

The version you will find online usually reads something like: the section 65F one hundred percent tax credit for IT exporters expires in June 2026, and eligible filers who do not claim it before the provision lapses cannot recover those years.

Two things are wrong with that.

First, the year. The clause never carried a 2026 date. Its own text ran the credit "upto the period ending on the 30th day of June, 2025".

Second, and more importantly, it never ran to that date at all. The clause was omitted by the Finance Act 2022. It has not been on the statute book since. FBR's own consolidation of the Ordinance preserves the omitted text in a footnote, which reads:

That footnote is the whole answer. The credit existed, it was conditioned on bringing eighty percent of export proceeds into Pakistan through normal banking channels, and it was removed four years ago.

What section 65F still provides

Section 65F is headed "Tax credit for certain persons" and was inserted by the Finance Act 2021, having first appeared through the Tax Laws (Second Amendment) Ordinance 2021. It gives a tax credit equal to one hundred percent of the tax payable under any provision of the Ordinance, including minimum tax, alternate corporate tax and final taxes, to two categories of person.

Coal mining in Sindh. Persons engaged in coal mining projects in Sindh, to the extent the income is derived from supplying coal to power generation projects. This clause was substituted by the Finance Act 2025, and an explanation inserted by the Finance Act 2024 confirms the credit is available only on income from those operations.

Startups certified by PSEB. A startup as defined in clause (62A) of section 2, for the tax year in which the startup is certified by the Pakistan Software Export Board and the next following two tax years.

That second limb is the one that still matters to technology businesses, and it is not the same thing as the removed export credit. It is time limited to three tax years and it turns on being a startup as the Ordinance defines that word, not on exporting.

Who counts as a startup

Section 2(62A), inserted by the Finance Act 2017, sets a definition that is narrower than the everyday use of the word. A startup means a business of a resident individual, association of persons or company that:

• commenced on or after 1 July 2012;
• is engaged in or intends to offer technology driven products or services to any sector of the economy;
• is registered with and duly certified by the Pakistan Software Export Board; and
• has turnover of less than one hundred million rupees in each of the last five tax years.

There is a second limb allowing the Board, with the approval of the Federal Minister in charge, to specify any other business or class of persons by notification in the official Gazette.

Two points catch people out. The turnover test looks at each of the last five tax years, not an average, and the PSEB certification is a precondition rather than a formality you can regularise afterwards. Our guide on what PSEB registration does and does not get you covers the certification side.

The conditions that attach to the credit

Section 65F(2) makes the credit conditional on compliance elsewhere. Where applicable, all of the following must be true:

• the return has been filed;
• withholding tax statements for the relevant tax year have been filed, in respect of those provisions where the person is a withholding agent; and
• sales tax returns for the tax periods corresponding to the relevant tax year have been filed, if the person is required to file them under any federal or provincial sales tax law.

In practice this is the limb that costs people the credit. A technology company that has filed its income tax return but not its withholding statements is outside the condition, and being on the Active Taxpayer List is not a substitute for it.

So how are IT exports actually taxed now

Export of IT and IT enabled services sits under section 154A, a separate regime with its own conditions and its own rate. It is not a successor to the omitted 65F credit and it does not work the same way. We cover it in IT export tax in Pakistan, and the freelancer side in freelancer tax in Pakistan.

If you were relying on the 65F export credit for a past year, the position is that it was unavailable from the Finance Act 2022 onwards. Whether anything can be done about a return already filed on the wrong basis is a question for a consultant looking at your actual assessment, not something to resolve from a web page.

Last verified: 27 August 2026. Primary sources read directly for this page: the Income Tax Ordinance 2001 as consolidated by the Federal Board of Revenue, specifically section 65F including sub section (1) clauses (a) and (b), the explanation inserted by the Finance Act 2024, the conditions in sub section (2), and the footnote recording that clause (c) was omitted by the Finance Act 2022 together with the reproduced text of the omitted clause; and section 2(62A) defining startup, together with its footnote recording insertion by the Finance Act 2017. The footnotes recording the insertion of sections 65F and 65G by the Finance Act 2021 and the substitution of clause (a) by the Finance Act 2025 were also read. General information, not tax advice. Confirm your own position with your tax consultant.