Insurance and insurance-agent services

Insurance is a sector where the sales tax treatment splits by product and by role. General insurance is typically taxable, life and health cover is often exempt or reduced, and the agents and brokers who place insurance provide their own taxable service. An insurer or intermediary therefore needs to distinguish carefully between the parts of its business. This guide draws those lines.

General insurance is taxable

General (non-life) insurance services are taxable services under provincial sales tax, administered by the relevant authority — SRB, PRA, KPRA or BRA — with Islamabad under FBR. Insurers charge provincial sales tax on general insurance premiums for the classes within the net — motor, property, marine and similar general classes are typically taxable services. So for the bulk of general insurance business, provincial sales tax applies to the premium, and the insurer accounts for it to the province.

Life and health are often exempt or reduced

Life and health insurance commonly stands apart. Under the rules of several provinces, life and health cover is exempt or reduced, reflecting its protective and long-term character — cover that protects families and provides for the future is treated more favourably than general commercial insurance. This creates a split within an insurer's book: general classes taxable, life and health often exempt or concessional. As with any exempt activity, exemption affects input tax, so an insurer writing both taxable and exempt classes must consider how input tax on shared costs is handled. Because the treatment varies by province and class, the position for a particular insurance product should be confirmed rather than assumed from the general rule.

Insurance agents and brokers

The third element is the intermediaries. The services of insurance agents and brokers — typically remunerated by commission for placing insurance — are themselves taxable services under the provincial regime. So an agent or broker earning commission is providing a taxable service, which is separate from the tax treatment of the underlying premium. Even where a particular insurance product is exempt, the intermediary's commission for arranging it is a service in its own right — a distinction that echoes the commission and agency treatment elsewhere in sales tax. An intermediary should therefore account for provincial sales tax on its commission income, regardless of how the underlying insurance is treated.

Common mistakes

• Applying one treatment across all insurance classes instead of splitting general from life and health.
• Assuming an agent\'s commission is untaxed because the underlying policy is exempt.
• Ignoring the input-tax consequences of writing exempt insurance classes.
• Relying on a general impression rather than confirming the class and province treatment.

Where it fits

Insurance mixes taxable and exempt classes and brings in commission and agency treatment for intermediaries. For province detail, see the Sindh (SRB) and Punjab (PRA) overviews. General insurance is taxable; life and health often exempt; agent commission taxable.

Where the rate actually comes from

General insurance, life and health cover, and agent or broker commission are each treated separately in the provincial schedules, so an intermediary and the insurer it sells for can be on different footings for the same policy.

The standard rate is 16 per cent in Punjab and 15 per cent in Sindh, Khyber Pakhtunkhwa and Balochistan, with telecommunication services higher at 19.5 per cent and Islamabad Capital Territory administered by FBR. Sindh has also moved from a positive list to a negative list, so a Sindh service is taxable unless it is specifically exempt — if you concluded some years ago that you were outside the net, that conclusion needs re-testing. The full picture is in the rates by province guide; the authoritative figure for your own category is in the current working tariff published by Sindh Revenue Board or the authority for your province.

Source check: 14 September 2026. Standard provincial rates and the Sindh negative-list reform are sourced in the rates-by-province guide. The category treatment described above is general orientation and has not been confirmed line by line against any authority's current schedule — read your own entry in the applicable working tariff before invoicing.

Sources

This guide is written against the official and clearly labelled professional references below. Rates, thresholds and portal procedures change between reviews, so open the primary source before relying on a figure.

• Sindh Revenue Board
• Punjab Revenue Authority sales tax guidance
• Khyber Pakhtunkhwa Revenue Authority
• Balochistan Revenue Authority
• Sales Tax Basics (FBR)

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