Pakistan’s top IT body says government signed ‘death warrant’ of industry with budget 2024-25

KARACHI: Officials of the Pakistan Software Houses Association (P@SHA) on Thursday expressed “profound apprehensions” about Pakistan’s national budget announced a day earlier, saying the IT Industry’s proposals had been “completely overlooked” and demanding amendments to the finance bill.
Pakistan’s IT sector continued its growth momentum in April this year, marking another all-time high record of $310 million in inflows. Central bank data shows the country achieved 62 percent year-on-year growth in the sector. During the 10 months of the current fiscal year (10MFY24), IT exports clocked in at $2.59 billion, up by 21 percent annual basis as compared to $2.14 billion recorded in 10MFY23.
Pakistani IT exports are expected to rise to above $3.5 billion after the caretaker government allowed a retention limit from 35 percent to 50 percent in the Exporters’ Specialized Foreign Currency Accounts.
Against this background, Ali Ihsan, senior vice chairman of P@SHA, said the government had signed the “death warrant” of the IT industry with the new budget.
“The government should have been aware that the last savior of Pakistan’s economy is the IT industry,” Ihsan said, “be it exports, current account management, employment generation or foreign direct investment.”
Muhammad Zohaib Khan, the chairman of P@SHA, said the IT industry was already facing a dearth of skilled and highly-skilled workforce:
“The government should have given a special package to the human resource pool to enable IT companies to continue with the momentum of double-digit growth in IT exports.”
He said higher income taxes on the salaried class included in the budget would “further fuel the brain drain of the skilled workforce from the IT industry of Pakistan,” adding that an allocation of Rs79 billion ($282.8 million) was primarily for the government’s own projects and IT parks while the industry as a whole and IT companies had been neglected.
“The situation was already alarming vis-à-vis taxes and human resource availability and P@SHA has, time and again, duly presented the facts and relevant proposals to the government,” Khan added.
On taxation measures, the P@SHA chief emphasized that the burden on IT companies was further compounded by the failure to address the challenges posed by the remote worker tax regime.
“Ironically, instead of removing the anomalies in current tax laws, additional taxes have been levied on imports of equipment and GST on hardware has been counterproductively enhanced from 5 percent to 10 percent,” Khan said.
He said the budget “directly” contradicted the Ministry of IT and Telecom’s claims of supporting the industry for investments and exports, demanding “necessary amendments” in the finance bill to ensure that Pakistan’s IT sector continued on its “spectacular growth trajectory.”