A heated debate has erupted between lawmakers and the IT sector over allegations of textile companies falsely claiming IT export status to benefit from significantly lower tax rates. During a Senate Standing Committee on Finance meeting, legislators, led by Senator Anusha Rahman, expressed concern that textile exporters are misrepresenting their shipments as IT services to exploit the 0.25% income tax rate, compared to the 29% levied on goods exports. The lawmakers pointed to a suspicious surge in IT company registrations as potential evidence of this manipulation, casting doubt on the recently reported 28% increase in IT exports.

Senator Rahman called for a comprehensive investigation to verify the authenticity of the export figures and prevent the misuse of tax incentives. However, the Pakistan Software Houses Association (P@SHA) Chairman, Sajjad Syed, vehemently rejected these allegations, asserting the genuine growth of Pakistan’s IT industry.

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He emphasized the lack of concrete evidence supporting the claims, while acknowledging that the Federal Board of Revenue (FBR) will conduct an investigation. “We have no evidence of such a practice… Our IT industry is growing, and we stand by the 27% growth figure,” stated Syed. He highlighted the successful participation of Pakistani IT companies in international events like LEAP and GITEX, where they secured multi-million dollar deals, as a testament to the industry’s progress.

Former P@SHA chairman Zohaib echoed Syed’s sentiments, emphasizing the steady growth trajectory of the IT industry over the past 18 months. He reiterated the success of Pakistani companies at international tech events, calling for celebration rather than doubt.

While lawmakers push for increased scrutiny of export reporting, the IT sector maintains its stance, citing consistent growth and international recognition as proof of its legitimate success.