Quick answer
IT services and IT-enabled services provided in Islamabad Capital Territory are taxed at 15% under the ICT (Tax on Services) Ordinance, 2001, which FBR administers. Exports of services are zero-rated, so work billed to foreign clients carries no ICT sales tax. Software or IT-based system development consultants can instead be taxed at 5%, but without any input tax adjustment or refund.
This guide uses FBR's edition of the Ordinance as amended up to 30 June 2025.
Which IT work does the 15% rate cover?
Section 3 of the Ordinance charges sales tax on taxable services rendered or provided in Islamabad Capital Territory at the rates in Table-1 of its Schedule. Serial 11 of Table-1 lists IT services and IT-enabled services at fifteen percent. IT services include software development, software maintenance, system integration, web design, web development, web hosting and network design. IT-enabled services include call centres, graphics design, accounting, HR services, data entry, cloud computing and data storage, among others.
Are exports taxed?
No. Section 3(1A) says the export of services is charged at zero per cent. A software house in Islamabad billing clients in the UK, US or Gulf therefore charges no ICT sales tax on that work. Export proceeds still fall under income tax rules such as section 154A, which is where PSEB registration helps.
What is the 5% option?
Table-2, serial 11, taxes services provided by software or IT-based system development consultants at five percent, on condition that no input tax adjustment or refund is admissible. That can suit a consultancy with few taxable purchases. A business with large taxable costs, such as equipment or rent charged with sales tax, should compare both positions before choosing.
How do registration and returns work?
Section 3(3) applies the Sales Tax Act, 1990 to ICT services for registration, payment, records, audit and penalties. In practice you need an NTN first and then register for sales tax through FBR's IRIS portal. The Finance Act, 2025 also lets FBR require service providers in Tables 1 and 2 to integrate with its computerised system for real-time reporting, from dates FBR sets by general order.
What if you work from Rawalpindi?
The Ordinance covers services rendered or provided in Islamabad Capital Territory. Services provided from Punjab, including Rawalpindi, fall under the Punjab Revenue Authority instead, with its own law and rates. If your team, clients or premises sit on both sides of the boundary, get advice on which authority applies before you register.
Where can you get help?
Tax support at TheWing.pk is led by our co-founder, a Chartered Accountant. A dedicated desk is PKR 36,400 a month and includes a complimentary 30-minute tax consultation, and a business growth session can cover pricing and invoicing for local clients. This page is general information, not tax advice; check FBR for notifications issued after June 2025.
Frequently asked questions
Do I charge ICT sales tax to a foreign client?
No. Section 3(1A) zero-rates the export of services.
Is graphic design an IT-enabled service?
Yes. Serial 11 of Table-1 lists graphics design among IT-enabled services.
Can I claim input tax at the 5% rate?
No. The Table-2 condition says no input tax adjustment or refund is admissible.
Which authority covers Rawalpindi?
Services provided from Punjab, including Rawalpindi, come under the Punjab Revenue Authority, not the ICT Ordinance.
Can I discuss my set-up in person?
Yes. Book a free tour at Central Mall, 2nd Floor, GT Road, DHA Phase 2, and bring your questions.
