The Federal Board of Revenue (FBR) has identified the taxpayers and income categories eligible for a 100% tax credit under Section 65F of the Income Tax Ordinance, 2001 for Tax Year 2027.
The provision allows a tax credit equal to 100% of tax payable under specified provisions of the Income Tax Ordinance, including minimum tax, alternate corporate tax and final taxes, subject to applicable conditions and limitations.
Who Can Claim the 100% Tax Credit?
1. Coal Mining Projects in Sindh
The tax credit is available to persons engaged in coal mining projects in Sindh, where the coal is supplied exclusively to power generation projects.
Importantly, the benefit is linked to income from the qualifying coal mining operations. It does not automatically extend to other income earned by the same taxpayer.
2. PSEB-Certified Startups
The second category covers qualifying startups under Section 2(62A) of the Income Tax Ordinance.
A qualifying startup can receive the 100% tax credit for the tax year in which it is certified by the Pakistan Software Export Board (PSEB) and the following two tax years.
This means the incentive may apply for up to three tax years, subject to meeting the statutory requirements.
Conditions for Claiming the Credit
The 100% tax credit is subject to compliance requirements. Where applicable, taxpayers must:
- File the relevant income tax return.
- File required withholding tax statements if acting as a withholding agent.
- File applicable sales tax returns for the corresponding tax periods.
Failure to meet the prescribed requirements may affect eligibility for the tax credit.
Is the 100% Tax Credit an Automatic Tax Exemption?
No. Although Section 65F provides a tax credit equal to 100% of specified tax payable, the benefit remains subject to the conditions, limitations and scope provided under the law.
For Tax Year 2027, businesses should therefore verify their eligibility, relevant income sources and tax compliance before claiming the credit.
Key Takeaway
The FBR 100% tax credit for Tax Year 2027 under Section 65F primarily covers qualifying Sindh coal mining projects supplying coal to power generation projects and PSEB-certified startups.
Businesses should maintain proper documentation and ensure their income tax, withholding tax and sales tax filing obligations are fulfilled before claiming the incentive.
Need Tax & Legal Assistance?
Xact Legal provides professional tax, legal and compliance services in Pakistan. Contact our team for assistance with tax credits, corporate taxation and regulatory compliance.
Disclaimer: This article is for general informational purposes only and does not constitute legal, tax, or professional advice. Tax laws, rules and FBR policies may change from time to time. Readers should consult a qualified tax or legal professional regarding their specific circumstances.