Punjab sales tax on services: PRA rates and registration
After the 18th Amendment, taxation of services moved to the provinces. If you render services in Punjab, the Punjab Revenue Authority is your sales tax authority — not FBR. Businesses that miss this fork end up charging tax they have no authority to collect while remaining unregistered with the body that actually has jurisdiction.
PRA rate structure
| Rate | Applies to | Input tax recoverable |
|---|---|---|
| 16% standard | Most services not otherwise specified — legal, advertising, contractors, courier, restaurants, salons, and the general residual category | Yes, subject to the usual conditions |
| 5% reduced | Notified sectors including IT and IT-enabled services, debt collection, certain construction sub-categories | No |
| 19.5% | Telecommunication services | Per the applicable rules |
| 15% | Carriage of goods by rail or road | Per the applicable rules |
| Zero-rated | Service exports from Punjab, subject to conditions including receipt through State Bank banking routes | No |
The taxable services and their rates are specified in the schedules to the Act. Classification is the work; the rate is the easy part.
The reduced rate is not automatically cheaper
The charge itself sits in section 3 of the Punjab Sales Tax on Services Act 2012, with the taxable services and their rates specified in the schedules to that Act. That is the instrument to check when confirming a rate — not the federal Sales Tax Act 1990, which governs goods and has its own separate registration.
Input tax credit is blocked against reduced-rate and zero-rated services. For a service business with meaningful taxable inputs, the arithmetic is not obvious:
For an IT services firm billing corporate clients who recover input tax, a higher output rate is often commercially neutral. For one billing consumers, it is not. Model your own position rather than assuming the lower headline rate wins.
We settle the taxable value, apportion input tax and file monthly with the right federal or provincial authority.
Avail our sales tax servicesRegistering with PRA
- Get your FBR NTN first. PRA registration is built on the federal registration, so income tax registration precedes it — see NTN registration.
- Classify your services against the schedules to the Act and identify the applicable rate for each revenue line.
- Apply through the PRA portal with business particulars, premises evidence, bank details and CNICs or formation documents.
- Complete verification where required and check every particular on the registration certificate.
- Update invoicing before the first taxable supply so registration number, rate and tax are stated correctly.
Operating under PRA registration
- Monthly returns, filed with PRA on its own cycle, separate from any federal sales tax return you file for goods.
- Invoice discipline: serial control, PRA registration number, service description matching a schedule entry, and value, rate and tax shown separately.
- Withholding. Certain recipients are required to withhold provincial services tax on payments to service providers. If you are a corporate buyer of services in Punjab, check whether that obligation attaches to you.
- Reconciliation. Twelve months of PRA returns should reconcile to service revenue in your annual income tax return. Build the reconciliation monthly.
Withholding on services, and the records that support it
Provincial regimes place a withholding obligation on certain recipients of services — typically government bodies, companies and other prescribed categories. If you are a corporate buyer of services in Punjab, you may be required to withhold a portion of the PRA tax on the invoice and deposit it yourself. Two consequences follow:
- As a service provider, expect some clients to remit part of your tax directly. Your return has to reconcile the tax you charged against the portion withheld by clients and the portion you deposit, which means tracking it invoice by invoice rather than in total.
- As a service buyer, failing to withhold where required is your exposure, not your supplier\'s. Check whether the obligation attaches to your organisation before assuming the supplier handles the whole amount.
Retain, for the statutory period: serially controlled invoices, the schedule entry relied on for each rate, client withholding evidence, monthly return workings, and the reconciliation between PRA turnover and the service revenue in your annual income tax return. That reconciliation is the first thing an audit asks for, and it is far cheaper to maintain monthly than to build retrospectively. Sales tax audit preparation covers the file structure.
If you operate in more than one province
Rates are broadly harmonised but not identical, and each authority requires its own registration and returns:
| Where the service is rendered | Authority | Standard rate |
|---|---|---|
| Punjab | PRA | 16% |
| Sindh | SRB | 15% |
| Khyber Pakhtunkhwa | KPRA | 15% |
| Balochistan | BRA | 15% |
Telecom is 19.5% across most jurisdictions. A consulting firm in Lahore serving clients in three provinces may need three registrations and three monthly returns. The federal-provincial boundary guide covers how to work out which applies.
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.
- Punjab Revenue Authority sales tax guidance
- Sales Tax Basics (FBR)
- Register for Sales Tax (FBR)
- Sindh Revenue Board
Questions people also ask
I am registered with FBR for sales tax. Do I still need PRA registration?
If you render taxable services in Punjab, yes. Federal registration covers goods under the Sales Tax Act 1990; it does not authorise you to charge or account for Punjab services tax. A business that supplies both goods and services commonly holds both registrations and files two separate returns on two separate cycles.
My office is in Lahore but my client is in Karachi. Which authority applies?
Place of provision governs, and it is not always where your office is. A service delivered to a Sindh recipient can fall under the Sindh Revenue Board even though the provider is headquartered in Punjab, which may require registration with both authorities. Map your client base against place-of-provision rules before assuming one registration covers everything.
Why can I not claim input tax on my reduced-rate services?
Input tax credit is not available against services taxed at a reduced rate or zero-rated under the Punjab regime. That is the trade-off for the lower output rate, and it changes the economics — a 5% rate with blocked input tax is not automatically better than 16% with recovery. Model both before assuming the reduced rate is favourable.
Are exported services taxable in Punjab?
Service exports from Punjab are zero-rated subject to conditions, typically including receipt through State Bank of Pakistan banking routes. Zero-rated is not the same as exempt or out of scope, and the conditions have to be documented for each engagement rather than asserted for the business as a whole.
What is the registration threshold for PRA?
Registration is required for persons providing notified taxable services, and threshold treatment varies by service category — some categories are notified regardless of turnover. Published figures in circulation are inconsistent, so confirm the position for your specific service category directly with PRA rather than relying on a general number.
Send the tax year and the transaction or filing involved, and we will tell you what is actually required.
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