Restaurants, caterers and food-delivery businesses

By Junaid IqbalUpdated 1 August 20265 min read

CA Finalist, ACCA FinalistEditorial team: Chartered Advisory Team of Chartered Accountants

Quick answer: Restaurant, catering and food-delivery services are taxable services under provincial sales tax, administered by the relevant provincial authority, with Islamabad under FBR. Several provinces apply a lower rate where customers pay by card or digital means than for cash, to encourage documentation, and delivery-platform arrangements raise their own questions about who accounts for the tax.

Restaurants, caterers and the food-delivery businesses built around them provide services, taxed by the provinces. The sector has two features worth understanding well: a rate that often depends on how the customer pays, and delivery-platform arrangements that raise questions about who accounts for the tax. This guide covers both, along with the basics of where a food business registers.

A provincial service

Restaurant and catering services are services, so they fall under provincial sales tax administered by the authority for the province where the restaurant operates — SRB, PRA, KPRA or BRA — with Islamabad under FBR. A restaurant's registration and monthly filing therefore sit with the provincial authority, not with FBR's goods regime. Caterers providing food and service at events fall in the same place. This is the foundation: a food-service business is, for sales tax, a provincial services taxpayer.

The card-versus-cash rate

The sector's most distinctive feature is that several provinces set a lower rate for bills paid by card or digital means than for cash. The policy is deliberate — a reduced rate for documented, traceable payments nudges both customers and restaurants towards digital transactions and away from undocumented cash. For the restaurant, this means the rate applied at the till can depend on the payment method: a card-paying customer may be charged a lower sales tax rate than a cash-paying one on the same meal. The specific reduced rate and the qualifying payment methods vary by province and change, so a restaurant needs to configure its point-of-sale system to apply the right rate to each payment type and confirm the current split with its authority. Getting this wrong — applying one rate to all payments — either over-charges card customers or under-declares on cash.

Food-delivery platforms

Food delivery has added a layer. The underlying restaurant service is a taxable provincial service, but who accounts for the tax on a delivered order — the restaurant itself, or the delivery platform acting as an intermediary — depends on how the arrangement is structured between them. Platforms may act as a marketplace, a collection agent, or something else, and the sales tax consequences follow that structure. Because delivery platforms are a developing area of provincial tax, a restaurant working with them should confirm the treatment rather than assume the platform handles everything or that nothing changes from a dine-in sale. The practical risk is a restaurant assuming the platform accounts for the tax when the obligation in fact remains its own.

Worked illustration. A restaurant in Sindh registers with SRB and files monthly. Its point-of-sale applies the lower card rate to card payments and the standard rate to cash, as the province's rules require, and it integrates with any point-of-sale reporting expected of it. For orders through a delivery app, it confirms with the platform and its adviser who accounts for the sales tax under their arrangement, rather than assuming.

Common mistakes

Applying a single rate to all bills instead of the card-versus-cash split the province sets.
Treating restaurant services as federal rather than provincial.
Assuming a delivery platform accounts for the tax when the obligation may remain the restaurant\'s.
Not configuring the point-of-sale system to the correct provincial rates and reporting.

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Where it fits

Food service sits alongside hotels and event venues in hospitality and connects to point-of-sale integration for documented sales. For province detail, see the Punjab (PRA) and Sindh (SRB) overviews. Restaurants are provincial services, often with a payment-method rate split.

Confirm before you rely on this. Restaurant rates, the card-payment split and delivery-platform treatment are set by provincial law and the relevant authorities and change regularly. Confirm the current position from SRB, PRA, KPRA, BRA or FBR, or a qualified tax adviser.

Where the rate actually comes from

Restaurants are the category where the published rate most often depends on how the customer paid and on turnover thresholds, so a single house rate applied across card, cash and platform orders will be wrong for at least one of them.

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.

Questions people also ask

Do restaurants charge federal or provincial sales tax?

Provincial. Restaurant and catering services are services, so they fall under provincial sales tax administered by the province where the restaurant operates, with Islamabad under FBR. This is why a restaurant's sales tax registration and filing are with the provincial authority, separate from the federal sales tax that applies to goods.

Why is the rate lower when customers pay by card?

To encourage documented, digital payments. Several provinces set a lower rate for restaurant bills settled by card or digital means than for cash, deliberately nudging customers and restaurants towards traceable transactions. The specific reduced rate and the qualifying payment methods vary by province and change, so a restaurant should confirm the current split with its authority and apply it correctly at the till.

How is sales tax handled on food-delivery orders?

It depends on the arrangement between the restaurant and the delivery platform. The underlying restaurant service is a taxable provincial service, but who accounts for the tax — the restaurant, or the platform as an intermediary — turns on how the arrangement is structured. Delivery platforms have made this a developing area, so the treatment should be confirmed rather than assumed.

Scope note: General educational information for Pakistan, not a legal opinion or a substitute for advice based on your documents. Law, notifications, portal procedures and individual facts can change the result.

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