That figure is the starting point, not the full answer. Services are taxed separately by each province at 15% or 16%. Some goods are taxed on their printed retail price, others at reduced rates, and some are zero-rated or exempt. The sections below explain which rate applies to what, and why.
Applicable period: 1 July 2026 to 30 June 2027.
Sales Tax Rates in Pakistan at a Glance
| Rate | Applies to | Legal basis |
|---|---|---|
| 18% | Standard rate on taxable goods and on imports | Section 3(1), Sales Tax Act, 1990 |
| 18% on retail price | Goods in the Third Schedule, charged on the price printed on the pack | Third Schedule |
| 0% | Exports and other zero-rated supplies | Fifth Schedule |
| Exempt | Specified goods, no tax charged and no input tax recovery | Section 13 and Sixth Schedule |
| Reduced rates | Specified goods, from 1% upward, usually with no input tax adjustment | Eighth Schedule |
| 4% further tax | Added on supplies to a buyer who is not registered or not on the Active Taxpayer List | Section 3(1A) |
| 3% value addition | Added on commercial imports, on top of the standard rate | Twelfth Schedule |
| 2% | Withheld on digitally ordered goods by a payment intermediary or courier | Eleventh Schedule |
| 15% or 16% | Services, depending on the province or territory | Provincial legislation |
| 19.5% | Telecommunication services in most jurisdictions | Provincial legislation |
One caution before you use this table. The rate on a specific product depends on its classification under the customs tariff, so check your PCT heading against the relevant schedule rather than assuming the standard rate applies.
Why Goods and Services Are Taxed Separately
Pakistan does not have a single sales tax authority. It has six.
The Federal Board of Revenue taxes goods under the Sales Tax Act, 1990. Sales tax on services became a provincial subject under the 18th Amendment, so each province taxes services under its own law, through its own authority. The FBR also collects sales tax on services inside Islamabad Capital Territory, under a separate federal ordinance.
This matters in two practical ways. A business selling both goods and services can hold more than one registration and file more than one return each month. And a service business working across provinces may charge a different rate depending on where the service is rendered.
Sales Tax on Services by Province and Territory
| Jurisdiction | Authority | Standard rate | Telecom |
|---|---|---|---|
| Punjab | Punjab Revenue Authority (PRA) | 16% | 19.5% |
| Sindh | Sindh Revenue Board (SRB) | 15% | 19.5% |
| Khyber Pakhtunkhwa | KP Revenue Authority (KPRA) | 15% | 19.5% |
| Balochistan | Balochistan Revenue Authority (BRA) | 15% | 19.5% |
| Islamabad Capital Territory | Federal Board of Revenue | 15% | 19.5% |
| Azad Jammu and Kashmir | AJK Central Board of Revenue | 15% or 16% by service | 19.5% |
Every jurisdiction also runs reduced rates for named sectors, usually between 1% and 8%. A reduced rate nearly always carries a condition: you cannot claim input tax against it.
Punjab
The standard rate is 16% under the Punjab Sales Tax on Services Act, 2012. The Punjab Finance Act 2026 left the standard rate alone. It did raise the reduced rate on a long list of services from 5% to 8% with effect from 1 July 2026, again with no input tax adjustment. Restaurants and hotels now charge 8% on card, mobile wallet and QR payments, against 16% otherwise. Rates and notifications are published by the Punjab Revenue Authority.
Sindh
The standard rate is 15% under the Sindh Sales Tax on Services Act, 2011. Sindh moved from 13% to 15% on 1 July 2024 to align with the other provinces. Any figure of 13% you see quoted elsewhere is out of date.
Restaurant services are charged at 8% where the customer pays digitally. A restaurant can apply to the Sindh Revenue Board to keep charging 15% and claim input tax instead.
Khyber Pakhtunkhwa
The standard rate is 15% under the Khyber Pakhtunkhwa Sales Tax on Services Act, 2022. KP now operates a negative list. Any service not listed as tax-free in the First Schedule is taxable, and anything without a specific rate in the Second Schedule falls to the 15% standard rate. Details are with the KP Revenue Authority.
Balochistan
The standard rate is 15% under the Balochistan Sales Tax on Services Act, 2015, administered by the Balochistan Revenue Authority.
Islamabad Capital Territory
Services rendered in Islamabad are taxed at 15% under the Islamabad Capital Territory (Tax on Services) Ordinance, 2001, collected by the FBR rather than a provincial authority.
A reduced rate of 5% applies to named categories, including certain information technology and IT-enabled services, with no input tax adjustment. Export of services from ICT is charged at 0%.
Azad Jammu and Kashmir and Gilgit-Baltistan
Azad Jammu and Kashmir levies sales tax on services under its own 2001 Act. Rates vary by service category, broadly matching the provinces, with telecom at 19.5%.
Gilgit-Baltistan does not operate an equivalent general sales tax on services. If you supply services into either territory, confirm the position with the relevant board before invoicing, because the schedules differ from the provincial ones.
What Decides the Rate on a Particular Good
The rate is not a matter of judgement. It is decided by which schedule of the Sales Tax Act, 1990 your product falls under, read with its PCT heading in the customs tariff.
Work through the schedules in this order.
The Third Schedule: tax on the printed retail price
For Third Schedule goods, the manufacturer or importer pays sales tax at the standard rate on the retail price printed on the packaging. The tax is not charged on the price at which they actually sell, and it is collected once, at the top of the supply chain.
The Finance Act 2026 expanded this schedule substantially from 1 July 2026, adding around twenty groups of consumer goods. These include edible oils and fats, sugar confectionery, sauces, noodles, footwear, household plastic and hygiene articles, cosmetics, handbags and wallets, sanitary ware, and ceramic products, all in retail packing.
If you manufacture or import any of these, this changes how you compute tax. It also requires the retail price to be printed on the pack, and failing to print it carries its own penalty.
The Fifth Schedule: zero-rated supplies
Zero-rated goods are taxable goods charged at 0%. Exports are the main category. Because the supply remains taxable, the supplier can claim input tax and, where input exceeds output, claim a refund.
The Sixth Schedule: exempt supplies
Exempt goods carry no sales tax at all, under Section 13 read with the Sixth Schedule. Basic foodstuffs, certain pharmaceuticals, and specified educational materials sit here. The Finance Act 2026 added contraceptives and female sanitary products to the exempt list.
The Eighth Schedule: reduced rates
The Eighth Schedule lists goods charged below the standard rate, with conditions attached to each entry. Locally assembled electric vehicles remain at 1%, extended to 30 June 2027 by the Finance Act 2026.
Reduced-rate entries usually restrict or block input tax adjustment. A lower headline rate therefore does not always mean a lower cost to the business.
If your product appears in none of these schedules and is not exempt, it is taxed at 18%.
Zero-Rated and Exempt Supplies Are Not the Same Thing
This is the most expensive mistake on the topic, and the two terms are used interchangeably across the web.
| Zero-rated | Exempt | |
|---|---|---|
| Tax charged on the sale | 0% | None |
| Is it a taxable supply? | Yes | No |
| Can you claim input tax on purchases? | Yes | No |
| Can you claim a refund? | Yes, where input exceeds output | No |
| Typical example | Exports | Basic food items |
An exporter selling at 0% recovers the sales tax paid on raw materials. A business making exempt supplies does not.
That unrecovered tax becomes a real cost. If your supplies are exempt, the sales tax you pay suppliers is money you will not see again, and it belongs in your costing rather than your tax account.
Sales Tax on Imports
Sales tax is charged at the import stage, at the time of customs clearance. The rate is 18%, applied to the value determined under Section 25 of the Customs Act, 1969, plus customs duty and any federal excise duty.
Commercial importers pay more. A value addition tax of 3% applies to commercial imports in addition to the 18%. The effective charge at import is therefore 21%, unless the goods are exempt or specifically excluded.
Goods imported by a manufacturer for use in its own production are not subject to the 3%. Goods exempt under the Sixth Schedule remain exempt at import. Sales tax is only part of the landed cost, so check customs duty online before committing to an order.
Further Tax on Supplies to Unregistered Buyers
If a registered person makes a taxable supply to someone with no sales tax registration number, or who holds one but is not on the Active Taxpayer List, a further tax of 4% applies on top of the normal rate under Section 3(1A).
A standard-rate supply to an unregistered buyer therefore carries 22%, not 18%.
This is a documentation measure rather than a revenue one. It is also why registered businesses check a buyer's ATL status before invoicing. Certain supplies are excluded from further tax by notification, including supplies covered by the Fifth Schedule.
Sales Tax for Online Sellers and E-Commerce
If you sell goods online in Pakistan, two rules apply to you beyond the ordinary rate.
First, a payment intermediary or a courier withholds 2% of the gross value of digitally ordered taxable goods supplied from within Pakistan. This sits in the Eleventh Schedule, as substituted by the Finance Act 2025. For an online card payment, the acquiring bank withholds it. For cash on delivery, the courier does.
Second, persons selling digitally ordered goods through an online marketplace, website, or application must apply for sales tax registration. Narrow exceptions exist for a cottage industry and for retailers taxed through electricity bills.
Marketplaces and couriers now face penalties for allowing unregistered sellers to use their services. That is why platforms ask for your registration details before onboarding you.
How Sales Tax Is Actually Calculated
Pakistan's sales tax works like a value added tax. You charge tax on what you sell, reclaim the tax on what you bought, and pay the difference.
- Output tax is the sales tax you charge your customers.
- Input tax is the sales tax you paid suppliers on eligible purchases.
- Tax payable is output tax minus admissible input tax.
Where input tax exceeds output tax, the excess is carried forward or claimed as a refund, depending on your circumstances.
A worked example
A registered manufacturer buys raw materials for Rs 1,000,000 and sells finished goods for Rs 1,500,000 in the same month. Both are standard-rated.
| Value | Sales tax at 18% | |
|---|---|---|
| Purchases, input tax | Rs 1,000,000 | Rs 180,000 |
| Sales, output tax | Rs 1,500,000 | Rs 270,000 |
| Payable to FBR | Rs 90,000 |
The manufacturer collects Rs 270,000 from customers but deposits only Rs 90,000. The remaining Rs 180,000 was already paid at the earlier stage.
What changes the answer
Two situations break this arithmetic.
If the sale were made to an unregistered buyer, further tax of 4% would add Rs 60,000 to the output side. That amount is not adjustable against input tax.
If the goods fell under a reduced rate in the Eighth Schedule, the Rs 180,000 of input tax would usually not be claimable at all. In that case the reduced rate can cost the business more than the standard rate would.
Tax Invoices and Records
A registered person must issue a serially numbered tax invoice at the time of supply. Section 23 of the Sales Tax Act, 1990 sets out what it must contain:
- Name, address and registration number of the supplier
- Name, address and registration number of the recipient, or the NIC or NTN of an unregistered buyer
- Date of issue of the invoice
- Description and quantity of the goods
- Value excluding tax
- Amount of sales tax
- Value including tax
Only one tax invoice may be issued for a taxable supply, and only a registered person may issue one. Records must be kept for six years under Section 24.
Digital invoicing is now mandatory
Issuing the invoice is no longer enough on its own. Under SRO 709(I)/2025 and the SROs that followed it, registered persons must integrate with the FBR's digital invoicing system through a licensed integrator and transmit each invoice in real time.
An integrated person's invoice carries three things it cannot generate itself: a unique FBR invoice number, a verifiable QR code, and the FBR digital invoicing logo. Annexure C of the sales tax return is then auto-filled from those invoices.
The Finance Act 2026 added teeth to this. Failure to comply with the electronic invoicing or production monitoring provisions is now a ground for the Commissioner to suspend or blacklist a registration under Section 21. A suspended registration means your buyers cannot claim input tax on your invoices, which usually stops the business before the penalty does.
FBR publishes its own digital invoicing FAQs covering integration and timelines.
Who Has to Register for Sales Tax
Registration depends on your category, not on a single turnover figure. The tests commonly applied are:
- Manufacturers, once annual taxable turnover crosses the prescribed threshold, usually stated as Rs 10 million, with cottage industry excluded
- All importers of taxable goods, with no threshold
- Tier-1 retailers, identified by chain membership, mall location, shop size, or annual electricity bills
- Wholesalers, dealers and distributors of taxable goods
- Persons making zero-rated supplies who want to claim refunds
- Persons selling digitally ordered goods online
Voluntary registration is available below the thresholds. It is often worth taking if you sell to registered buyers, because an unregistered supplier's invoices give the buyer no input tax.
Categories and thresholds change with each Finance Act. Confirm your position against the current Act before deciding, or ask a consultant to check it.
Return Filing and Payment Deadlines
Most registered persons file monthly under the standard procedure.
| Step | Due date |
|---|---|
| File Annexure C, sales invoices and output tax | 10th of the following month |
| Deposit the tax payment | 15th of the following month |
| E-file the complete return on IRIS | 18th of the following month |
CNG retailers file quarterly. Manufacturers also file an annual return by 30 September following the financial year. A nil return is still required for a month with no activity.
Late payment attracts default surcharge under Section 34, at 12% a year or KIBOR plus 3%, whichever is higher, calculated on the unpaid tax. A late return attracts a separate penalty under Section 33, which the Finance Act 2026 increased sharply.
If you have not filed one before, our step-by-step guide to filing a sales tax return in Pakistan walks through the IRIS screens. The official due dates are published by FBR.
What Changed for 2026-27
The headline rate did not move. The compliance rules did.
- Third Schedule expanded. Around twenty groups of consumer goods moved to retail price taxation from 1 July 2026.
- New exemptions. Contraceptives and female sanitary products were added to the exempt list.
- Electric vehicles. The 1% rate on locally assembled EVs runs to 30 June 2027.
- E-invoicing became enforceable. Failure to integrate is now a ground to suspend or blacklist a sales tax registration.
- Penalties raised. Section 33 penalties for late filing were increased.
- Punjab reduced rates. A long list of services moved from 5% to 8% from 1 July 2026.
Common Mistakes Businesses Make With Sales Tax Rates
- Applying 18% to services. Services are provincial. A Lahore consultancy charges 16% under PRA rules, not 18%.
- Treating exempt and zero-rated as the same. They have opposite input tax consequences.
- Forgetting further tax. Charging an unregistered buyer 18% when the law requires 22% leaves the shortfall with you.
- Assuming a reduced rate is cheaper. A reduced rate with no input tax adjustment often costs more overall.
- Copying a rate table from another website. Many published tables still show 17% for goods or 13% for Sindh.
- Ignoring the Third Schedule. Charging tax on your invoice price where the law requires the printed retail price understates the liability.
- Registering with the wrong authority. A business supplying both goods and services needs the FBR and a provincial authority.
- Issuing invoices outside the digital system. An invoice without an FBR number may not support your buyer's input tax claim.
- Missing the 18th. A late return starts the penalty clock even when no tax is due.
Frequently Asked Questions
What is the current sales tax rate in Pakistan?
The standard rate is 18% on taxable goods and on imports, under Section 3 of the Sales Tax Act, 1990. Services are taxed provincially at 15% or 16%.
Is sales tax in Pakistan 17% or 18%?
It is 18%. The rate rose from 17% to 18% in February 2023 and has not changed since. Pages still showing 17% are out of date.
What is the sales tax rate on services in Pakistan?
It is 16% in Punjab, and 15% in Sindh, Khyber Pakhtunkhwa, Balochistan and Islamabad Capital Territory. Telecommunication services are charged at 19.5% in most jurisdictions.
Is GST the same as sales tax in Pakistan?
In everyday use, yes. Pakistani law calls it sales tax, but it operates as a value added tax, and GST is used informally for the same thing.
What is the sales tax rate on imports in Pakistan?
It is 18% at the import stage, plus a further 3% value addition tax for commercial importers. That gives 21% in most commercial import cases.
What is further tax in sales tax?
It is an extra 4% charged when a registered person supplies taxable goods to a buyer who is not registered, or who is not on the Active Taxpayer List.
Which goods are exempt from sales tax in Pakistan?
Those listed in the Sixth Schedule under Section 13, together with items exempted by notification. Check the current Sixth Schedule for your specific product rather than relying on a general list.
Do freelancers and online sellers pay sales tax?
Freelancers providing services fall under provincial sales tax on services, with reduced rates available for IT and IT-enabled services in several jurisdictions. Online sellers of goods face 2% withholding by payment intermediaries or couriers, and generally must register.
How often do sales tax rates change in Pakistan?
The standard rate changes rarely. Schedules, reduced rates and exemptions change every year through the federal and provincial Finance Acts, effective 1 July. Mid-year changes also come through SROs.
Getting the Rate Right for Your Business
The rate on your invoice depends on four things: what you sell, which schedule it falls under, where the supply happens, and whether your buyer is registered. Getting any one of them wrong usually surfaces later as a short payment, a disallowed input claim, or a notice.
If you are unsure which rate or which authority applies, our sales tax consultants can confirm your position, handle registration, and manage monthly filing.