FBR Imposes Sales Tax on IT Services - Android

The Federal Board of Revenue (FBR) Thursday has imposed a 16 percent sales tax on 17 categories of “IT services”… Read More

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The Federal Board of Revenue (FBR) Thursday has imposed a 16 percent sales tax on 17 categories of “IT services” and “IT-enabled services” including software development, software maintenance, system integration, web design, web development, web hosting, and network design.

The FBR has expanded the list of “IT services” and “IT-enabled services” for collection of 16 percent sales tax from the service providers falling within the jurisdiction of Islamabad Capital Territory (ICT).

The FBR has issued S.R.O. 77 (I)2021 to amend S.R.O. 495(I)/2016, dated the 4th July 2016 relating to the levy of sales tax on services rendered or provided in Islamabad Capital Territory.

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Following services are now subjected to 16 percent sales tax within the jurisdiction of Islamabad Capital Territory (ICT): “IT services” including software development, software maintenance, system integration, web design, web development, web hosting, and network design.

The “IT-enabled services” included inbound or outbound call centers, medical transcription, remote monitoring, graphics design, accounting services, HR services, telemedicine centers, data entry operations, locally produced television programs] and insurance claims processing.

Under the Islamabad Capital Territory (Tax on Services) Ordinance, 2001, 16 percent sales tax is applicable on services provided by software or IT-based system development consultants. Under the S.R.O. 77 (I)2021, the FBR has explained the scope of levy of sales tax on “IT services” and “IT-enabled services”.

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SRO77 (1)12021 issued by the FBR said,

“In exercise of the powers conferred by clause (a) of sub-section (2A) of section 3 of the Islamabad Capital Territory (Tax on Services) Ordinance, 2001 (XL II of 2001), read with clause (b) of sub-section (2) of section 3 of the Sales Tax Act, 1990, the Federal Government is pleased to direct that the following further amendments shall be made in its Notification No. S.R.O. 495(1)/2016, dated the 4th July 2016.

For the purpose of this entry — “IT services” include software development, software maintenance, system integration, web design, web development, web hosting, and network design; and “IT-enabled services” include inbound or outbound call centers, medical transcription, remote monitoring, graphics design, accounting services, HR services, telemedicine centers, data entry operations, locally produced television programs] and insurance claims processing.”, the notification added.

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