Medical, healthcare and diagnostic services

Healthcare occupies a sensitive place in the tax system, and many providers assume medical services are simply exempt. Core healthcare often is exempt or reduced — but not everything a hospital, clinic or lab does falls into that category, and the position differs by province. A provider offering a range of services needs to know which are taxable and which are not. This guide explains the landscape.

Core healthcare is often exempt or reduced

Core medical and healthcare services provided by hospitals, clinics and doctors are exempt or reduced under the rules of several provinces, reflecting the essential nature of healthcare. Treating illness and providing medical care is, in many provincial regimes, either outside the sales tax net or subject to concessional treatment. This is why healthcare providers often experience little or no sales tax on their central activity. But the crucial qualifier is that this is not universal — it depends on the province and on the specific service, and an exemption carries its own consequences for input tax. A provider should not assume a blanket exemption covers everything it does.

Where healthcare services can be taxable

Services beyond core treatment more often fall within the net. Diagnostic laboratories, cosmetic and aesthetic procedures, and certain support or ancillary services can be taxable in some provinces even where core medical care is exempt or reduced. A modern clinic that offers medical treatment and, say, cosmetic or wellness services, or an operation that runs a diagnostic lab, may therefore have a mix of taxable and non-taxable services under one roof. The line between essential medical care and elective or commercial health-adjacent services is where the tax treatment often turns — and that line is drawn differently across provinces. Recognising that a healthcare business can be partly in and partly out of the net is the key insight.

Handling a mix of services

For a provider with both exempt-or-reduced and taxable services, the task is to identify each service and its treatment separately, and to check the position in each province where it operates. This means applying the right treatment to each service and managing the input-tax consequences of having exempt services — because exempt outputs generally do not carry input recovery, a provider with a mix must consider how input tax on shared costs is treated, an issue related to exempt-supply mechanics. Given how much the rules vary by province and change, confirming the current position with the relevant authority for each service is essential rather than optional. A provider that maps its service menu to the correct treatment, province by province, avoids both wrongly taxing exempt care and wrongly exempting taxable services.

Common mistakes

• Assuming a blanket exemption covers every service a healthcare provider offers.
• Overlooking that diagnostic, cosmetic or ancillary services can be taxable.
• Ignoring the input-tax consequences of having exempt services in the mix.
• Applying one province\'s treatment to operations in another without checking.

Where it fits

Healthcare turns on the exempt-versus-taxable distinction and the federal-versus-provincial divide. For province detail, see the Sindh (SRB) and Punjab (PRA) overviews. Core care is often exempt or reduced; diagnostic, cosmetic and support services can be taxable.

Where the rate actually comes from

Healthcare is the category with the widest spread between exemption, a low concessionary rate and the standard rate, and the line between them is drawn by the nature of the service rather than by the type of institution providing it.

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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