New Sales Tax Rate in Pakistan 2025

The current general sales tax rate in Pakistan is 18%, which was increased from 17% effective February 14, 2023, and remains applicable for the tax year 2025. This 18% rate applies broadly to goods and imports, with some exceptions and special rates for certain categories.

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Current Sales Tax Rates in Pakistan on Services by Region

Punjab Revenue Authority sales tax rate: The Punjab Revenue Authority (PRA) charges a standard sales tax rate of 16% on services, with telecommunication services taxed at 19.5%.
Sindh sales tax on services rates: The Sindh Revenue Board (SRB) imposes a sales tax on services generally at 15% (increased from 13% in previous years), with specific rates for sectors such as telecommunication services at 19.5%, restaurants, marriage halls, professionals, insurance, and advertisements mostly at 15%, and some reduced rates for hospitals and clinics (3%).
The sales tax on services in Islamabad is 15- 16%. For IT and IT-enabled services, the Federal Board of Revenue (FBR) clarified that they have been subject to sales tax at 16% since 2015 but were reduced to 5% in 2018. The definition of IT services for sales tax purposes aligns with the Income Tax Ordinance, of 2001.
KPK sales tax on services rates: The sales tax rate on services is 15%.
Balochistan: The sales tax rate on services is 15%.
Gilgit Baltistan: No sales tax on services (0%).

Additional Notes

There is an additional 4% sales tax charged on supplies to unregistered persons or entities, with possible exemptions by the Federal Government.
Some goods and services have special or increased rates, for example, certain imported goods and vehicles are taxed at 25% since March 2023.
Punjab does not currently have an exemption threshold for services taxable under its Sales Tax on Services Act, 2012, though exemptions for certain hotel services are under consideration.
Sindh offers conditional exemptions and tiered tax rates for specific sectors like beauty parlors and clinics, with rates ranging from 5% to 15% depending on compliance and turnover.

Region Wise Sales Tax Rate on Services in Pakistan

Region	Sales Tax Rate on Services	Special Notes
Pakistan (General)	18% (goods)	General goods tax rate
Punjab	16%	Telecom services at 19.5%
Sindh	13%	Telecom at 19.5%, various sector rates
Islamabad (ICT)	15%	IT services reduced to 5%
Khyber Pakhtunkhwa	15%
Balochistan	15%
Gilgit Baltistan	0%	No sales tax on services

This reflects the latest tax structure as of 2024-2025, with the general sales tax rate stabilized at 18% and provincial variations for services tax rates

Sales Tax Rate in Pakistan Chart

Reduced Rates of Sales Tax in Pakistan

The reduced rates of sales tax in Pakistan vary by sector, province, and specific services or goods, often designed to encourage compliance or support certain industries. Key reduced sales tax rates include:

Sindh Province:
- Rural cable TV operators: 10%
- Standalone cable TV operators: 2%
- Restaurant services with digital payments: 8%
- Standalone recruiting agents for overseas employment: 5% (extended until mid-2026)
- Some services like education and medical practitioners are taxable at reduced rates beyond exemption thresholds, with specific thresholds applied.
Federal Level and Other Provinces:
- Small companies benefit from a reduced income tax rate of 20%, but sales tax on goods remains at the standard 18% unless otherwise specified.
- Personal computers and laptop imports are taxed at 10%, reduced from the previous rates.
- Pharmaceuticals (medicaments) were reintroduced at 18% from a previous 1%, indicating some sectors have lost reduced rates recently.
- LPG sales tax increased from 10% to 18%, showing some reduced rates have been withdrawn

List of Goods Exempted from Sales Tax in Pakistan for Zone Port Businesses

Category	Description/Notes
Pharmaceuticals and medical supplies	Exempt to keep healthcare affordable
Books and newspapers	Exempt to promote education
Agricultural produce	Exempt to support farming sector
Basic foodstuffs and agricultural supplies	Exempt from import sales tax
Exports	Zero-rated or exempt to encourage trade
Office stationery	Generally zero-rated/exempt, some items under review
Plant, machinery, equipment for Special Zones	Exempt to promote industrial development in zones
Goods for nonprofit/government hospitals and educational institutions	Exempt from sales tax and customs duties
Certain pesticides	Exempt if registered by the Department of Plant Protection
LNG for fertilizer manufacturers	Exempt as feedstock
Diplomatic goods	Exempt for diplomats and privileged persons
Raw materials for EPZs and the Gwadar Special Economic Zone	Zero-rated/exempt to boost exports and industrial activity

These exemptions are detailed in the Sales Tax Act 1990, particularly in the Fifth and Sixth Schedules, and related government notifications

Conditions, Restrictions, and Procedures

The company selling the machinery must be properly registered under the law.

A correct export bill must be provided, showing the seller’s registration number.
The person or company buying the machinery must be a manufacturer working inside the Gwadar Free Zone and must have a certificate from the Gwadar Port Authority.
The buyer must give a written agreement (called an indemnity bond) to the tax department. This promise says the machinery will not be sold, moved, or transferred out of the Gwadar Free Zone for five years, unless the tax office gives written permission.
If the machinery is taken to any other part of Pakistan outside the Gwadar Free Zone, sales tax must be paid based on the import value.
If any of these rules are broken, legal action will be taken. The buyer will also have to pay the sales tax, extra charges for late payment, and penalties.

Key Points from the Sales Tax Act, 1990

Here’s a summary of the sales tax exemptions under the Sales Tax Act, 1990, for Zone/Port businesses, especially those operating in the Gwadar Free Zone:

1. Zero-Rated Supplies – Section 4 read with Fifth Schedule

Certain supplies are zero-rated (0% sales tax):

Sr. No. 13

Supplies of raw materials, components, and goods for manufacturing and export within the Gwadar Free Zone.
If supplied to the tariff area of Pakistan, sales tax applies based on the import value.

Sr. No. 14

Supplies of locally manufactured plant and machinery for manufacturers in the Gwadar Free Zone.
Includes machinery, apparatus, control gear, and parts used in manufacturing.
Conditions include:
- A supplier must be registered under the Act.
- Must file a bill of export.
- The purchaser must be a certified manufacturer in the Gwadar Free Zone.
- An indemnity bond must be submitted to prevent the movement/sale of machinery outside the Zone for five years.
- If moved to a tariff area, tax applies on the import value.
- Violation leads to recovery of tax, penalties, and legal action.

2. Exemptions – Section 13(1) read with Sixth Schedule

Some supplies/imports are exempt from sales tax, especially for specific companies linked to the Gwadar Port development.

Sr. No. 100A

Materials, machinery, and equipment for Gwadar Port & Free Zone construction/operations.
Applies to China Overseas Ports Holding Company Limited (COPHCL) and its subsidiaries, contractors & subcontractors.
Ship bunker oils are also exempt.
Conditions:
- Must hold a Concession Agreement.
- The Ministry of Ports & Shipping must certify the goods.
- No resale/disposal without FBR approval.
- Detailed documentation, invoicing, and reporting procedures must be followed.

Sr. No. 100B

Supplies within Gwadar Free Zone by businesses established in the Zone are exempt for 23 years.
Supplies outside the Zone are taxable.

Sr. No. 100C

Vehicles imported by COPHCL and its subsidiaries for Gwadar projects are exempt for 23 years, subject to specific conditions.

Sr. No. 100D

Machinery, equipment, and materials imported by investors for exclusive use in the Gwadar Free Zone or for exports are exempt.
If taken out of the Zone for non-export purposes, sales tax must be paid.

Key Takeaways

Zero-rating under Section 4 encourages exports and industrial setup within the Gwadar Free Zone.
Exemptions under Section 13(1) benefit COPHCL and its affiliates involved in the Gwadar Port’s development.
These incentives are backed by strict conditions, record-keeping, and government oversight.

Sales Tax Compliance in Pakistan

If your business is registered for sales tax in Pakistan, you need to issue a proper tax invoice for your sales. However, if you are selling directly to customers (like in retail), you are allowed to use a simplified invoice.

A standard tax invoice should include:

Your business name and address
Your sales tax registration number
The customer’s name and address
Date of the sale or supply
A unique invoice number
Details of the products or services sold
The sales tax rate, the tax amount, and the total invoice value
If you’re dealing in foreign currency, convert the amount into Pakistani Rupees (PKR) using an official exchange rate

When Does Sales Tax Apply? (Time of Supply)

Sales tax becomes payable depending on the type of supply:

For services: Tax is due when the service is provided or when you receive payment, whichever comes first.
For goods: Tax is due when you receive payment for the invoice.
For imports: Tax must be paid when the goods are cleared through customs into Pakistan.

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