Sales Tax in Pakistan: What You Need to Know

According to the Organisation for Economic Co-operation and Development, value-added tax (VAT) is a final-consumption tax levied on the value added at each production and distribution stage. Pakistan follows that VAT-style invoice-credit sequence in 3 stages:

• A registered business charges output tax on a taxable sale.
• The business deducts eligible input tax paid on taxable business purchases.
• The business remits the difference to the relevant authority.

In other words, Pakistan's statutes call the charge sales tax, but the credit mechanism works like VAT. That's the mechanism behind the monthly amount you pay.

As of 24 August 2026, registered businesses collect and remit sales tax because the law makes the supplier responsible for accounting. However, the consumer normally bears the cost because the consumer cannot claim business input credit.

The Sales Tax Act, 1990 governs federal tax on goods and imports. Meanwhile, the Islamabad and provincial services laws govern taxable services, which is why you must identify the jurisdiction before issuing an invoice.

Yes. As of August 2026, Pakistan commonly uses GST as an abbreviation for general sales tax, while federal and provincial statutes use the term "sales tax." Although the 2 labels refer to the same consumption-tax idea, neither label tells you which authority governs the transaction.

As of 24 August 2026, the Federal Board of Revenue (FBR), Pakistan's federal tax agency, administers sales tax on goods and imports nationwide. FBR also administers sales tax on services attributed to Islamabad. Likewise, 4 provincial revenue authorities administer sales tax on services attributed to their provinces.

That's your first decision because the wrong authority produces the wrong registration, rate, and return.

As of 24 August 2026, FBR administers 3 sales-tax areas:

• Taxable goods supplied in Pakistan under the Sales Tax Act, 1990
• Goods imported into Pakistan under the Sales Tax Act, 1990
• Services attributed to the Islamabad Capital Territory under the ICT (Tax on Services) Ordinance, 2001

Accordingly, you use the federal system when your transaction falls within any of those 3 areas.

As of 24 August 2026, the 4 provincial revenue authorities and their governing laws are:

• Punjab Revenue Authority (PRA), under the Punjab Sales Tax on Services Act, 2012
• Sindh Revenue Board (SRB), under the Sindh Sales Tax on Services Act, 2011
• Khyber Pakhtunkhwa Revenue Authority (KPRA), under the Khyber Pakhtunkhwa Sales Tax on Services Act, 2022
• Balochistan Revenue Authority (BRA), under the Balochistan Sales Tax on Services Act, 2015

As of 24 August 2026, you can use the following table for your first jurisdiction check. Next, you should test the result against the relevant place-of-provision rules because those rules determine where a service is taxed.

As of August 2026, you need more than 1 registration when your taxable services belong to more than 1 jurisdiction. For example, suppose your agency bills Rs 500,000 into Punjab and Rs 500,000 into Sindh. The general rates produce 2 separate tax amounts:

• Punjab at 16%: Rs 80,000 payable through PRA
• Sindh at 15%: Rs 75,000 payable through SRB

Consequently, you need separate registrations, invoices, ledgers, and returns when the place-of-provision rules allocate those sales to both provinces. One office does not always mean one authority.

As of 24 August 2026, Pakistan applies 3 rate layers: the standard federal goods rate, special federal schedules, and jurisdiction-specific services rates. Therefore, you must classify the supply before multiplying its value by a percentage.

That said, here's the number anchoring most goods calculations.

As of 24 August 2026, the standard rate on taxable goods and imports is 18%. Notably, the federal Budget 2026-27 retained 18% instead of increasing the rate to 19%. That decision gives you the starting rate, but the schedules can still replace it.

As of 24 August 2026, 5 common departures can change an 18% calculation:

• Reduced or fixed rates apply to scheduled or notified items.
• Third Schedule goods use printed retail price when the listed entry requires it. The Third Schedule is the statutory list of goods taxed by reference to retail price.
• Some imports and vehicles follow special valuation or rate rules.
• Supplies to unregistered persons attract additional tax when section 3 applies.
• Imported raw materials sold locally without physical change attract 3% value-added tax under the June 2026 amendments.

The Harmonized System code, or HS code, is the customs classification number used to identify a product. Accordingly, you should verify the HS code, schedule entry, buyer status, and valuation rule before quoting a rate.

As of 24 August 2026, the following general rates provide your starting point. However, a named service can carry a reduced, enhanced, or payment-method-specific rate, so you should verify the exact schedule entry before invoicing.

*You should verify the current service entry before invoicing. Rates checked on 24 August 2026 against PRA FAQs, the SRB schedule, KPRA FAQs, and BRA FAQs.

As of 24 August 2026, the Fifth Schedule to the Sales Tax Act, 1990 mainly lists zero-rated goods. Similarly, the Sixth Schedule mainly lists exempt goods. You should read the current entry and its conditions because a copied list can miss a Finance Act amendment or notification.

As of 24 August 2026, taxable, zero-rated, and exempt supplies produce different input-tax results. A taxable supply carries its applicable rate. A zero-rated supply carries 0% while generally preserving eligible input recovery. By contrast, an exempt supply carries no output tax and generally blocks the related input credit.

Therefore, "no tax on the invoice" does not settle the accounting. A zero-rated exporter can recover eligible upstream tax when the refund conditions are met. However, an exempt seller normally absorbs related upstream tax as a cost.

That distinction determines whether the unpaid tax disappears or moves into your cost base.

As of 24 August 2026, FBR's registration guidance covers importers, non-cottage manufacturers, wholesalers, distributors, liable retailers, and specified exporters. Similarly, you register a taxable service with FBR or the provincial authority governing the service. Your actual activity controls.

As of 24 August 2026, you register a manufacturer with FBR unless the current cottage-industry exclusion or another exemption applies. You should verify the latest turnover definition because a Finance Act can change the boundary.

As of 24 August 2026, FBR requires commercial importers to register. Accordingly, you need the records for customs clearance and later input-tax claims.

As of 24 August 2026, wholesalers, dealers, and distributors fall within FBR's categories. Retailers register when the Act or a notified regime applies. A Tier-1 retailer is subject to enhanced integration rules. Notably, Finance Act 2026 added retailers with annual turnover of Rs 200 million or more.

As of 24 August 2026, you register a taxable service with FBR for Islamabad or the relevant provincial authority. Specifically, PRA states that Punjab has no general exemption threshold for a taxable service provider. However, you should check the named service entry for exclusions.

As of 24 August 2026, an online marketplace is a digital platform connecting buyers and sellers. Under FBR's sales-tax notifications, 3 participants can carry duties for digitally ordered goods:

• Online marketplaces
• Payment intermediaries
• Couriers

Nevertheless, third-party collection doesn't replace every seller obligation, so you still test the registration.

As of 24 August 2026, you should not assume that every non-resident digital service carries a blanket 18% federal charge. The official Finance Act summary announces no rule in that form. Instead, you test 4 elements:

• The service classification
• The customer's location
• The applicable Islamabad or provincial services law
• Any reverse-charge, local-representative, or registration rule

Admittedly, digital income-tax changes add confusion. But income tax and sales tax remain separate liabilities.

To complete your sales-tax registration, follow 3 stages:

• Identify the authority that governs your supply.
• Gather the requested identity, business, bank, address, and activity evidence.
• Complete the portal and verification process.

Subsequently, that's the identity you need to charge tax and file returns.

As of 24 August 2026, a Sales Tax Registration Number (STRN) is FBR's 13-digit identifier for a federal sales-tax registrant. Provincial authorities issue separate identifiers, so you use the number belonging to the governing authority.

As of August 2026, a National Tax Number (NTN) identifies an income-tax taxpayer, while an STRN identifies a sales-tax registrant. FBR states that an NTN does not replace an STRN. You can't cure a missing STRN by printing an NTN.

As of August 2026, you prepare 5 document groups:

• Owner, partner, or director identity details
• Business registration and bank evidence
• Address and utility evidence
• Product, HS-code, or service descriptions
• Branch, machinery, warehouse, and authorized-person details where relevant

To register your business with FBR, follow 4 steps:

• Complete the sales-tax application in Iris, FBR's online tax portal.
• Select the correct activity.
• Upload the supporting evidence.
• Finish any biometric or site verification.

Then, you review the activity because it flows into later invoices and returns.

To register your services business provincially, follow 3 steps:

• Open the portal of PRA, SRB, KPRA, or BRA.
• Provide the requested evidence.
• Complete the authority's verification process.

Previously signed contracts can trigger more than 1 registration, so you should map customer locations first.

As of 24 August 2026, FBR's return guidance separates your calculation into 2 amounts:

• Output tax charged on taxable sales
• Eligible input tax paid on business purchases or imports

You normally remit the difference, not every rupee collected.

According to FBR guidance available on 24 August 2026, output tax is the tax you charge on taxable supplies. You report it under the time-of-supply rules.

According to FBR's sales-tax basics, input tax is tax paid on taxable business purchases and imports. However, your claim must still satisfy the Act's document and purpose tests.

As of 24 August 2026, you adjust input tax in 3 stages:

• Report valid purchases and imports in the return.
• Offset eligible input tax against output tax.
• Apply the statutory restrictions and adjustment cap.

Section 8B generally limits input adjustment to 90% of output tax, subject to exceptions. Notably, Finance Act 2026 lets FBR vary that limit by reference to e-invoicing, point-of-sale integration, and production monitoring.

As of 24 August 2026, 4 defects commonly block or defer your input-tax claim:

• Missing, incorrect, or invalid supplier invoices
• Purchases linked to exempt, personal, or non-business use
• Claims outside the relevant period and six succeeding periods
• A reduced-rate restriction, supplier-declaration issue, section 8 block, or section 8B cap

As of August 2026, suppose you sell Rs 1,000,000 of standard-rated goods and purchase Rs 400,000 of eligible inputs, excluding tax:

Consequently, the Rs 72,000 claim sits Rs 90,000 below the ceiling.

To calculate your sales tax, follow 4 steps:

• Classify the supply.
• Identify the taxable value.
• Apply the correct rate.
• Subtract allowable input tax from output tax.

The hardest step isn't multiplication. It is choosing the correct value and rate.

As of August 2026, you can use 4 formulas in this order:

• Tax on an exclusive price = value × rate
• Tax-inclusive price = value × (1 + rate)
• Exclusive value = inclusive price ÷ (1 + rate)
• Net payable = output tax − allowable input tax

To add 18% tax to your tax-exclusive price, multiply the base by 0.18. For example, Rs 100,000 produces Rs 18,000 tax and a Rs 118,000 total.

To extract sales tax from your tax-inclusive price at 18%, follow 3 steps:

• Divide Rs 118,000 by 1.18 to find the Rs 100,000 base.
• Subtract Rs 100,000 from Rs 118,000 to find Rs 18,000 tax.
• Alternatively, multiply the gross price by 18 and divide by 118.

Otherwise, multiplying Rs 118,000 by 18% overstates the tax because the price already includes it.

To calculate your net monthly balance, follow 4 stages:

• Total your output tax.
• Subtract allowable input tax.
• Apply the statutory caps and withholding credits.
• Apply valid debit notes and credit notes.

Accordingly, the worked example produces Rs 108,000 before later adjustments.

As of 24 August 2026, a valid tax invoice is a prescribed document containing the required party, supply, value, and tax fields. Because a cash memo can omit those fields, you can't judge validity from the tax line alone.

As of 24 August 2026, you should check 6 information groups on a tax invoice:

• Supplier name, address, and STRN
• Buyer details and identifier where required
• Serial number and date
• Description and quantity
• Value, rate, tax, and total
• Digital invoice number or QR data where integration applies

As of 24 August 2026, FBR states that an invoice without a valid supplier STRN should not carry federal sales tax. As a result, you can't rely on the invoice for input credit until you verify the STRN.

Community experience shows the confusion. In a 2026 r/Lahore discussion about restaurant bills, users compared tax lines with the supplier's NTN, STRN, invoice number, and QR code. However, FBR's verification result controls legally.

Electronic invoicing is the structured digital transmission of invoice data to FBR. As of 24 August 2026, FBR's digital-invoicing FAQ states that Statutory Regulatory Order (SRO) 709 of April 2025 applies to corporate and non-corporate registrants within scope.

Subsequently, Finance Act 2026 strengthened enforcement. Therefore, you should confirm your notification status and integration route.

As of 24 August 2026, the rules require you to retain electronic invoice records for 6 years. Keep 6 matching record groups:

• Sales invoices
• Purchase invoices
• Import documents
• Payment evidence
• Ledgers
• Debit and credit notes

Ultimately, every return figure should trace to a real transaction.

To file your sales-tax return, follow 4 stages:

• Reconcile the tax period's invoices.
• Calculate the net balance.
• Pay by the payment deadline.
• Submit through the correct portal.

As of 24 August 2026, registered persons generally file even when no tax is payable.

As of 24 August 2026, FBR's return guidance requires every federal registrant to file. The return declares 5 groups:

• Purchases
• Sales
• Input tax
• Output tax
• The payable, refundable, or carried-forward balance

As of 24 August 2026, FBR's published due-date cycle requires 3 monthly actions:

• Submit Annexure C, the sales-invoice annexure, by the 10th.
• Pay the balance by the 15th.
• File the return by the 18th of the following month.

Likewise, current provincial calendars generally use the 15th for payment and 18th for filing. Nevertheless, you should check monthly for deadline changes.

To file your federal return on Iris, use 6 steps:

• Reconcile sales and purchase invoices.
• Complete Annexure C.
• Review the system data.
• Calculate the tax balance.
• Pay the amount due.
• Submit the return.

Finally, you shouldn't claim a supplier invoice until any mismatch is resolved.

To file your provincial services-tax return, follow 4 steps:

• Report the invoices attributed to that province.
• Apply the province's service rate and input-credit rules.
• Pay through the authority's approved channel.
• Submit by the authority's deadline.

Similarly, you reconcile each provincial return separately. Otherwise, a copied federal return can misallocate services.

To pay your sales-tax balance, follow 3 checks:

• Generate the payment instrument from the correct portal.
• Pay through an approved banking channel before the deadline.
• Confirm that the payment posts to the correct authority and tax period.

Accordingly, a bank debit is incomplete until the portal allocates it correctly.

As of 24 August 2026, federal sales-tax non-compliance can produce 5 consequences:

• A statutory penalty
• Default surcharge
• Tax recovery
• Input-credit denial
• Prosecution for specified fraudulent conduct

Admittedly, the amount depends on the offence, delay, and current section 33 entry. That's why you should quantify exposure from current law.

As of 24 August 2026, failure to register after you become liable can trigger 4 responses:

• Compulsory registration
• Recovery of past-period tax
• Default surcharge and statutory penalties
• An estimated assessment when records do not establish the liability

Therefore, you should identify the first period in which registration became mandatory.

In June 2026, Finance Act 2026 revised section 33, including non-filing penalties. You should check the current table because filing delay affects the amount.

As of 24 August 2026, an invalid invoice can deny your input credit and expose the supplier to penalties. By contrast, a knowingly false input claim can lead to 5 responses:

• Tax recovery
• Default surcharge
• Audit or assessment
• Prosecution where the offence provisions apply
• Suspension or blacklisting

As of 24 August 2026, FBR can suspend or blacklist registrants linked to fictitious supplies, fake invoices, or specified integration failures. Notably, Finance Act 2026 strengthened public identification and connected-credit denial.

Consequently, you should verify suppliers throughout the relationship.

In June 2026, Pakistan enacted Finance Act 2026. The Act retained the 18% standard goods rate while changing 4 areas:

• The taxable base
• Exemptions
• Digital compliance controls
• Audit and assessment administration

The FBR Budget 2026-27 salient features explain the policy, while the Finance Act 2026 controls legally. Now, that's what lets FBR see more transaction data before an audit begins.

In June 2026, Finance Act 2026 moved more consumer goods into Third Schedule retail-price taxation. Specifically, added entries include listed sauce and ketchup preparations plus footwear categories. As a result, you check both retail price and rate.

In June 2026, Finance Act 2026 added or extended 3 notable exemption groups:

• Female sanitary towels, pads, and tampons
• Qualifying completely knocked-down electric-vehicle kits until 30 June 2027
• Specified shipping and aviation items

However, the official FBR summary says the exemption for family-planning devices was withdrawn. Therefore, you should not describe contraceptives as a new 2026 exemption.

In June 2026, Finance Act 2026 strengthened electronic-invoicing enforcement. However, accounting software alone does not prove FBR integration.

In June 2026, Finance Act 2026 tightened controls on fake invoices and fictitious suppliers. Accordingly, you should match every material purchase against 3 records before filing:

• The supplier's active registration
• Evidence of delivery or service completion
• Evidence of payment

As of 24 August 2026, Finance Act 2026 announces no blanket 18% charge for every non-resident digital service. Instead, you determine liability from classification, customer location, and the applicable law.

In June 2026, Finance Act 2026 introduced the National Faceless Centre, an FBR unit for electronic audits, assessments, and related proceedings. Consequently, FBR can match 4 data groups before an officer contacts you:

• Sales-tax returns
• Digital invoices
• Customs records
• Payment records

Ultimately, clean transaction records matter more as faceless assessment expands.

As of 24 August 2026, the standard federal rate on taxable goods and imports is 18%. General services rates are 15% in Islamabad, Sindh, Khyber Pakhtunkhwa, and Balochistan, while Punjab uses 16%. However, you should check the named supply because special schedules can replace those general rates.

As of 24 August 2026, sales tax on services is federal in Islamabad and provincial in the 4 provinces. You register with FBR for Islamabad or the relevant provincial authority for Punjab, Sindh, Khyber Pakhtunkhwa, or Balochistan.

Consequently, you can need more than 1 registration when your services belong to multiple jurisdictions.

As of August 2026, the final consumer normally bears the economic cost of sales tax. Registered businesses collect and remit that tax. Meanwhile, each eligible business in the supply chain deducts input tax from output tax, which prevents the full amount from cascading at every stage.

As of 24 August 2026, federal registration categories include importers, non-cottage manufacturers, wholesalers, distributors, liable retailers, and specified exporters. Similarly, you must register a taxable service with FBR for Islamabad or the relevant provincial authority.

To calculate your sales tax at the 18% standard rate, multiply a tax-exclusive price by 0.18. For example, Rs 100,000 produces Rs 18,000 tax. Then, you add the tax to reach a Rs 118,000 total.

Alternatively, you extract tax from an inclusive price by dividing by 1.18 or using the 18/118 shortcut.

According to FBR guidance available on 24 August 2026, output tax is the tax you charge on taxable sales. Input tax is eligible tax you pay on business purchases or imports.

Therefore, you normally pay the difference after applying the document rules, blocked-credit rules, timing limits, and adjustment caps.

As of 24 August 2026, exempt goods are mainly listed in the Sixth Schedule to the Sales Tax Act, 1990 and applicable notifications. Because entries contain conditions, you should check the current HS code and exact schedule wording instead of relying on labels such as "medical" or "educational."

As of 24 August 2026, zero-rated supplies carry tax at 0% and generally preserve eligible input recovery. By contrast, exempt supplies carry no output tax and generally block related input credit. That is the practical difference.

As of 24 August 2026, an STRN identifies a federal sales-tax registrant, while an NTN identifies an income-tax taxpayer. FBR states that an NTN does not replace an STRN. Accordingly, you should verify the STRN before accepting a federal tax invoice.

Yes. As of 24 August 2026, imported goods generally face federal sales tax at 18%. However, an exemption, zero rate, special rate, or valuation rule can change the result.

You can treat eligible import tax as input tax when the customs documents and Sales Tax Act conditions support the claim.

Yes. As of August 2026, GST remains the common abbreviation for general sales tax, while Pakistani statutes use "sales tax."

Ultimately, that's why you should focus on 3 questions: what you supplied, where the supply belongs, and which authority governs it.

The information in this article is provided for general informational and educational purposes only and does not constitute financial, legal, or tax advice from nsave or any of its affiliates. It is not a substitute for advice from a qualified financial adviser. We make no representations or warranties, whether expressed or implied, that the content is accurate, complete, or up to date.

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