Provincial sales tax on services: rates, authorities and place of supply
Sales tax on services in Pakistan is not one tax. It is five regimes — four provincial authorities plus FBR for Islamabad Capital Territory — each with its own statute, schedule, portal, return and due date. A business that supplies services across provincial lines is dealing with several of them at once.
This guide is the rate reference the service-specific guides on this site point back to.
The standard rates
| Where the service is supplied | Authority | Standard rate | Governing statute |
|---|---|---|---|
| Punjab | Punjab Revenue Authority (PRA) | 16% | Punjab Sales Tax on Services Act 2012 |
| Sindh | Sindh Revenue Board (SRB) | 15% | Sindh Sales Tax on Services Act 2011 |
| Khyber Pakhtunkhwa | KP Revenue Authority (KPRA) | 15% | Khyber Pakhtunkhwa Finance Act 2013 |
| Balochistan | Balochistan Revenue Authority (BRA) | 15% | Balochistan Sales Tax on Services Act 2015 |
| Islamabad Capital Territory | Federal Board of Revenue | Under the ICT services regime | ICT (Tax on Services) Ordinance 2001 |
SRB states on its own site that the general rate of Sindh sales tax on services is 15 per cent, with the exception of telecommunication services which are taxed at 19.5 per cent, and that tax is levied at reduced or concessionary rates in certain cases. SRB: taxable services
Where the rate departs from standard
Three patterns recur across the provincial schedules:
- Telecommunication services are taxed higher. 19.5 per cent in both Punjab and Sindh. Punjab's Second Schedule lists telecom services under tariff heading 98.12.
- Reduced rates, typically in the 3 to 8 per cent band. Punjab operates reduced rates of 3, 5 and 8 per cent depending on the service. Sindh's restructured Second Schedule carries a reduced-rate part covering sectors including construction, freight transport, call centres, licensing of intellectual property, IT support and hospitality.
- Sector-specific and legacy rates. Punjab taxes government civil works at a reduced rate without input tax adjustment, and retains legacy rates for older public-sector projects whose financing was fixed in earlier years. Carriage of goods by rail or road carries its own rate.
The reduced-rate trade-off
A reduced rate is not simply cheaper. Provincial statutes commonly deny input tax adjustment against reduced-rate and zero-rated supplies, so a business carrying significant taxable inputs can end up worse off than it would be at the standard rate with full recovery. The comparison has to be run on your actual input profile. Work through input tax versus output tax before assuming the lower percentage is the better position.
We settle the taxable value, apportion input tax and file monthly with the right federal or provincial authority.
Avail our sales tax servicesSindh now runs a negative list
This is the most consequential change in provincial services taxation in recent years, and many Sindh businesses have not absorbed it.
Under the old system, Sindh operated a positive list: a service was taxable only if it appeared in the Second Schedule to the Sindh Sales Tax on Services Act 2011. That made "my service is not on the list" a complete and correct answer.
The Sindh Finance Act 2025 replaced that with a negative list. Services provided in Sindh in the course of an economic activity are taxable unless specifically exempted. Alongside that shift, the Act restructured the Second Schedule into a higher-rate part and a reduced-rate part, adopted the UN Central Product Classification coding system, and removed numerous individual service definitions from the Act. Existing taxable services continued at the rates prevailing as at 30 June 2025 unless expressly changed.
Two further points from the same reform are worth knowing. Classification disputes under the CPC coding are decided by SRB, and SRB states that inclusion in or exclusion from the code does not itself determine taxability. And services falling under Entry 53 of the Federal Legislative List — terminal taxes on goods or passengers carried by railway, sea or air, and taxes on their fares and freights — are outside provincial jurisdiction, which resolves a line of litigation including the shipping agents' case.
Place of supply decides the authority
The question that determines which authority you answer to is where the service is supplied — not where your office sits, where the invoice is raised, or where payment lands.
Because each province legislated separately, the rules are not perfectly harmonised, and the origin province and the destination province can each assert a claim over the same transaction. That overlap is real and unresolved in places, and it is the reason cross-province service businesses commonly hold multiple registrations rather than one.
Practical consequences:
- Map your engagements by province of supply before deciding where to register, not after a notice arrives.
- Expect multiple registrations if you serve clients in several provinces — one per province, plus FBR for ICT services.
- Build the rate logic into invoicing so the correct provincial rate is applied per engagement rather than one house rate applied to everything.
- Keep the returns separate. Each authority has its own portal, return format and due date; none of them reconcile to the others automatically.
This is separate from federal sales tax on goods
The 18th Amendment split the tax by subject matter. Sales tax on goods remained federal and is administered by FBR under the Sales Tax Act 1990. Sales tax on services went to the provinces. A business supplying both holds a federal registration for its goods and a provincial registration for its services, files on both, and has to allocate mixed supplies between them correctly. The federal versus provincial guide works through that split, and STRN versus NTN covers the registration numbers.
How to confirm your own rate
- Identify the province of supply for each engagement.
- Open that authority's current working tariff or schedule — SRB, PRA, KPRA or BRA.
- Find your service category and read the rate against it, together with any condition attached to a reduced rate.
- Check whether input tax adjustment is available at that rate.
- Record the schedule version and the date you checked it in your return working papers.
That last step is what turns a rate decision into a defensible one. On audit, the question is rarely whether you guessed well; it is whether you can show what you relied on and when.
Source check: 14 September 2026. The Sindh standard rate of 15 per cent and the 19.5 per cent telecommunication rate are attributed to SRB's own published taxable-services page. The Sindh negative-list reform, the Second Schedule restructuring, the CPC adoption and the Entry 53 clarification are attributed to published professional analysis of the Sindh Finance Act 2025 and the Sindh budget announcement. The Punjab standard rate of 16 per cent, the reduced-rate bands and the civil-works treatment are drawn from published secondary analysis of the Punjab Sales Tax on Services Act 2012 and have not been confirmed line by line against the current PRA schedule. Rates are revised by each provincial Finance Act; confirm your own category against the authority's current working tariff before invoicing. This guide is a rate orientation, not a determination of the rate applicable to any particular supply.
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: taxable services and general rate
- Punjab Revenue Authority
- Khyber Pakhtunkhwa Revenue Authority
- Balochistan Revenue Authority
- Register for Sales Tax (FBR)
Questions people also ask
Which authority does a cross-province invoice belong to?
The question is where the service is supplied, not where your office is or where the invoice is raised. A Lahore consultancy delivering work to a Karachi client can find the engagement falls within Sindh, which means SRB registration rather than PRA on that engagement. Because the provincial statutes were each drafted separately, both a origin-province and a destination-province authority can assert a claim on the same transaction, which is precisely why cross-province service businesses end up with more than one registration.
Do I have to register with more than one authority?
If you supply taxable services in more than one province, generally yes — one registration per province where you render services, plus FBR for Islamabad Capital Territory. Each registration brings its own portal, its own monthly return and its own due date. There is no single national services registration, and holding an FBR sales tax registration for goods does not cover you for provincial services.
Why does the rate matter less than people assume?
Because the common failures are not rate errors. They are registering with the wrong authority, treating a service as a good, claiming input tax against a reduced-rate supply where the law does not allow it, and failing to register in a second province at all. A 15 versus 16 per cent difference is a rounding issue next to an unregistered province carrying penalties and default surcharge on every month of unfiled returns.
What changed when Sindh moved to a negative list?
Under the old positive list, a service was taxable in Sindh only if it appeared in the Second Schedule, so "my service is not on the list" was a complete answer. That list no longer performs that function. Sindh now works on the basis that services provided in the course of an economic activity are taxable unless specifically exempt, which reverses the default. Businesses that concluded years ago that they were outside the Sindh net should re-test that conclusion rather than assume it survived.
Can I claim input tax on a reduced-rate service?
Often not, and this is the trade-off that makes a reduced rate less attractive than it looks. Provincial statutes commonly deny or restrict input tax adjustment against reduced-rate and zero-rated supplies. A business with substantial taxable inputs can be worse off on a reduced rate than on the standard rate with full input recovery, so the comparison has to be run on the actual input profile rather than assumed from the headline percentage.
Are exported services taxable?
Services genuinely supplied to a client outside Pakistan are commonly treated as zero-rated, subject to conditions that usually include receipt of proceeds through banking channels as export proceeds. The conditions are the substance of the relief, not a formality — an export claim that cannot be evidenced through the banking trail is the claim most likely to be disallowed on audit. Check the specific condition in the province you are registered in, because the wording is not identical across the four statutes.
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