In Pakistan, sales tax on services is collected by provinces (not the federal government). Each province has its own law, authority, and procedures.
�� Governing Laws & Authorities
- Sindh Revenue Board (SRB) – Sindh
- Punjab Revenue Authority (PRA) – Punjab
- Khyber Pakhtunkhwa Revenue Authority (KPRA) – KP
- Balochistan Revenue Authority (BRA) – Balochistan
�� Each authority operates under its own provincial sales tax law (generally called Sales Tax on Services Act).
�� What is Taxed?
Provincial sales tax applies to services, including:
- IT and software services
- Consultancy and professional services
- Construction and contractors
- Advertising and marketing
- Telecom and banking services
- Restaurants and hospitality
�� Goods are taxed federally under sales tax (FBR), not provinces.
�� Tax Rates
- Standard rate: ~15% to 16% (varies by province and service)
- Reduced / special rates apply for certain sectors
�� Registration Requirement
You must register if you:
- Provide taxable services in a province
- Meet the registration threshold (or even without threshold in many cases)
�� Registration is done with the relevant provincial authority, not the Federal Board of Revenue.
�� Filing & Payment
- Returns are usually filed monthly
- Payment must be made before the due date
- Filing is done through online portals of each authority
�� Input Tax Adjustment
- Businesses can claim input tax credit on services
- Conditions:
- Proper invoices
- Registered suppliers
- Relevant to taxable activity
�� Reduces overall tax liability
�� Place of Supply Rule (Important)
Tax is paid in the province where:
- Service is rendered, or
- Customer is located (depending on service type)
�� Critical for businesses operating in multiple provinces
�� Penalties for Non-Compliance
- Late filing penalties
- Default surcharge
- Possible audits and assessments
�� Key Differences vs Federal Sales Tax
| Feature | Provincial Sales Tax | Federal Sales Tax |
| Applies to | Services | Goods |
| Authority | Provinces | Federal Board of Revenue |
| Laws | Provincial Acts | Sales Tax Act, 1990 |
| Filing | Separate per province | Centralized |
�� Practical Takeaway
- If your business provides services → deal with provinces
- If your business sells goods → deal with FBR
- If both → you may need dual registration