Incentive Data

Reduced rate of sales tax on IT based services in KPK.




[Classification, if applicable]

Rate of Tax






Digital or IT-based services in whatever form or manner or under whatever arrangement including but not limited to:

---web design and development,

---mobile app development,

---server management,

---page-speed optimization, UX/UI


---PPC marketing, blogging,

---Google AdWords, Facebook advertising, Instagram advertising,

---custom software development,

assessment and roadmap development, software maintenance and support services, supply or sale of any other software or software product or products through any medium,

---online digital marking services such

as search engine optimization (SEO),·

---social media marketing, content marketing, affiliate marketing, influencer marketing, email marketing, viral marketing services, etc.


Explanation: This entry does not cover such persons who are engaged in providing or rendering services 'relating to software or IT-based system development or management or similar other such fields in their individual capacity and are eligible to

pay tax at reduced rate under item (g)

of entry No. 19


Two Percent

(2%) without any input tax adjustment



Services provided or rendered by practitioners, professionals consultants and advisers (by whatever name called) in their respective fields or disciplines


g)         Software     or    IT-based     system development  or     management      or similar other such fields.   






(i) Fifteen Percent

(15%) m case of

entities operating in

collaboration or as

subsidiary or branch

of foreign service

providing entities and


(ii) Five Percent

(5%) without any

input tax adjustment

m case of entities

other than operating

in collaboration or as



  1. S. No. 15 and 19(g) of Working Tariff 2021-22, Second Schedule to the Finance Act, 2013 KPK

  1. Section 8, (t), (xi), (a) and (b) of the KP Finance Act 2021

  1. Para (h) of the notification No. BO(Res-III) FD/2-2/2019-20/Vol-I by Finance Department, Government of Khyber Pakhtunkhwa, dated 05.08.2020