Provincial Sales Tax on Services in Pakistan
Reviewed by the Commoner Law editorial team. Sources: pakistancode.gov.pk, Punjab/Sindh/KP/Balochistan provincial codes, Supreme Court of Pakistan, FBR, EOBI, SBP, NEPRA, OGRA, PMDC, FIA, and provincial Healthcare Commissions. Provincial variations cite Punjab/Sindh/KP/Balochistan Acts and ICT-specific ordinances. Written in plain English with everyday Urdu legal terms (FIR, qabza, khula, NTN, CNIC) for a general audience — this is educational content, not legal advice. Our editorial standards
What is this right?
Before the 18th Amendment, sales tax on services was federal and largely unenforced. Since 2011 (Sindh first), each province has set up its own Revenue Authority, registered service providers, and started collecting at rates of 13–16% on most service heads.
- SRB (Sindh): rate 13% on most services; some sectors at 8% reduced rate. Most aggressive enforcement; large taxpayer unit handles MNCs.
- PRA (Punjab): 16% standard; reduced rates for IT, hospitals, education.
- KPRA (KP): 15% standard; lower for tourism services.
- BRA (Balochistan): 15%; smaller revenue base.
Inter-provincial supply of services creates the headache. "Origin" vs "destination" treatment differs across provinces, and taxpayers operating in multiple provinces routinely face double taxation that requires resolution through the Council of Common Interests or sometimes the Sindh High Court (which has been active on this).
The IT export sector has been a flashpoint, currently exempt or zero-rated by most provinces but with conditions that vary annually with the Finance Act.
When does it apply?
- You provide services in any province (consulting, IT, advertising, courier, travel, hospitality, etc.).
- Your annual turnover exceeds the registration threshold (typically Rs 4–10 million depending on province).
- You operate across provinces and need to navigate origin/destination rules.
What to do to register with your provincial RA
- Register with the relevant provincial Revenue Authority. SRB: srb.gos.pk; PRA: pra.punjab.gov.pk; KPRA: kpra.gov.pk; BRA: bra.gob.pk.
- File monthly sales tax returns by the 15th of the following month. Online portals only.
- Maintain invoice-by-invoice records with Service Sales Tax Number (SSTN) on each invoice.
- For inter-provincial supply, get a tax opinion from a CA experienced in inter-provincial services. Many disputes can be avoided by structuring contracts carefully.
- Notice received? Same procedure as FBR — respond on time, attend hearings, appeal to provincial Tax Tribunal if needed.
What should you NOT do?
- Don't assume FBR registration covers services. Federal STRN is for goods; provincial RAs cover services. Both may be needed for mixed businesses.
- Don't ignore provincial RA notices thinking only FBR matters. Sindh and Punjab RAs have aggressive enforcement, including bank attachment.
- Don't claim federal exemption for provincial liability. The exemption frameworks are separate.
Frequently asked questions
Do I need both federal and provincial sales tax registration?
Federal STRN if you supply taxable goods; provincial registration if you supply services. Both if you do both. Many SMEs need only one; mixed businesses need both.
Are IT services taxed?
Mostly exempt or zero-rated for IT exports — but conditions vary annually with each province's Finance Act. Verify your specific service is covered. Domestic IT services are typically taxed at reduced rate.
Can the provincial RA freeze my bank account?
Yes — under recovery provisions in each provincial Sales Tax Act. The notice procedure must be followed, but enforcement is real. Respond to recovery notices immediately and seek stay if disputed.
When does provincial sales tax on services apply?
You provide services in any province (consulting, IT, advertising, courier, travel, hospitality, etc.).Your annual turnover exceeds the registration threshold (typically Rs 4–10 million depending on province).You operate across provinces and need to navigate origin/destination rules.
I'm a freelancer earning in Pakistan — do I owe provincial sales tax?
Register with the relevant provincial Revenue Authority. SRB: srb.gos.pk; PRA: pra.punjab.gov.pk; KPRA: kpra.gov.pk; BRA: bra.gob.pk.File monthly sales tax returns by the 15th of the following month. Online portals only.Maintain invoice-by-invoice records with Service Sales Tax Number (SSTN) on each invoice.For inter-provincial supply, get a tax opinion from a CA experienced in inter-provincial services. Many disputes can be avoided by structuring contracts carefully.Notice received? Same procedure as FBR — respond on time, attend hearings, appeal to provincial Tax Tribunal if needed.
What mistakes should I avoid with provincial sales tax on services?
Don't assume FBR registration covers services. Federal STRN is for goods; provincial RAs cover services. Both may be needed for mixed businesses.Don't ignore provincial RA notices thinking only FBR matters. Sindh and Punjab RAs have aggressive enforcement, including bank attachment.Don't claim federal exemption for provincial liability. The exemption frameworks are separate.