FBR confirms 4% withholding tax on IT and IT-enabled services

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ISLAMABAD: The Federal Board of Revenue (FBR) has confirmed that Information Technology (IT) and IT-enabled services (ITeS) will continue to be taxed at a reduced 4% withholding rate for the fiscal year 2025–26, offering relief to Pakistan’s digital economy amid broader tax hikes.

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According to the FBR’s latest income tax circular, other non-specified services will now face a flat 15% withholding tax, including payments to sports professionals, marking a significant increase from previous rates.

The FBR also raised rates on categorized services under sections 152 and 153 of the Income Tax Ordinance. The new rate under section 152 rises from 4% to 8%, and under section 153 from 4% to 6%, excluding the IT and ITeS sectors.

Industry leaders, have consistently urged the government to maintain a stable tax regime to foster digital growth. This continuity signals a positive step in that direction.

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