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Sales tax on services in Pakistan is a provincial tax. After the 18th Amendment, each province collects it through its own authority: the Punjab Revenue Authority (PRA), Sindh Revenue Board (SRB), Khyber Pakhtunkhwa Revenue Authority (KPRA) and Balochistan Revenue Authority (BRA). In the Islamabad Capital Territory it is administered by FBR. Sales tax on goods remains federal and is collected by FBR.
Key takeaways
- Services are taxed by the province where the service is provided or received, under each province's own law.
- A business providing services in several provinces may need several registrations.
- Rates, exemptions and input tax rules differ by province and change through annual finance acts.
- Provincial returns should reconcile with FBR sales tax and income tax filings.
Which authority collects sales tax on services in each province?
Punjab services are taxed by PRA, Sindh services by SRB, Khyber Pakhtunkhwa services by KPRA and Balochistan services by BRA. Services in Islamabad are taxed under federal law administered by FBR.
Our location pages explain the local position in more detail for Punjab, Sindh, Khyber Pakhtunkhwa, Balochistan and Islamabad.
When does a business need to register for provincial sales tax?
A business that provides a taxable service listed in a province's schedule generally must register with that province's authority, subject to any threshold or exemption. Registration is separate from FBR registration, even though the same NTN is used.
How do businesses operating in several provinces stay compliant?
The key question is where each service is provided or received. A consultancy based in Lahore serving a client in Karachi may face Sindh tax on that service. Contracts, invoices and the place of performance should be documented for every engagement.
- Map each revenue stream to the province where it is taxed
- Register in each province where taxable services are provided
- Issue invoices showing the correct provincial tax
- File separate monthly returns and reconcile them with revenue
Can input tax be claimed against provincial sales tax?
Each province has its own input tax rules, and many restrict or deny input tax on certain purchases or services. Cross province input claims are possible in some cases but require careful documentation.
What are the risks of getting provincial sales tax wrong?
Under registration, wrong rates and unreconciled returns lead to assessments, default surcharge and penalties, sometimes from two authorities for the same transaction. Our tax advisory service handles registrations, monthly filings and notices across all four provinces and Islamabad.
Written by
Sakhawat Ali, ACA
Founding Partner, Taxation and Regulatory. Over 10 years across taxation, corporate compliance, audit and assurance.
Meet our partnersThis guide is general information, not advice for your specific circumstances. Laws, rates and deadlines change, so contact us before acting on it.