Provincial sales tax registration for services

Why services are taxed by the provinces

Since the 18th Constitutional Amendment of 2010, the power to tax services belongs to the provinces. Each province has its own law, its own revenue authority and its own online portal. The result is that a consultancy, a software house, a restaurant or a clinic deals with a provincial authority, while a manufacturer or trader selling goods deals with FBR. Services supplied in the Islamabad Capital Territory are taxed under a separate federal law administered by FBR.

A business that sells both goods and services therefore needs both registrations. A furniture maker in Lahore that also charges for installation and design can owe federal sales tax on the furniture and Punjab tax on the services, each reported on its own return.

Check which of your activities count as a service under the law and which as a supply of goods. Mixed supplies, such as a printer that designs, prints and delivers brochures, are a classic grey area, and the answer determines whether you deal with FBR, with a province or with both.

The four authorities and their laws

The Punjab Revenue Authority administers the Punjab Sales Tax on Services Act 2012. The Sindh Revenue Board administers the Sindh Sales Tax on Services Act 2011. The Khyber Pakhtunkhwa Revenue Authority and the Balochistan Revenue Authority administer their provinces' own legislation. Every one publishes its schedule of taxable services and its rates, which are revised through provincial finance acts, so a figure quoted in a blog post can be out of date within a year.

Registration is online with the authority concerned, normally with the business NTN, identity documents, proof of the business address and a bank account. After approval you receive a provincial registration number that appears on your invoices beside the NTN.

Large service sectors differ between provinces: telecom, banking, advertising, restaurants, software and consultancy appear on most schedules, yet categories, definitions and exemptions do not match one for one. Read the schedule for your province and your exact service, not the headline description, and keep a printed copy of the entry with the date on which you checked it.

Where the service is provided and when to register twice

The hardest practical question is which province taxes a given service. Rules look at where the service is provided or where the recipient is, and they differ by province and by service category. A web agency in Lahore designing a site for a Karachi client is a typical example where both PRA and SRB rules may need to be checked, and the answer can differ from a service performed physically on site.

Where a business has offices or regular customers in several provinces, registering in each and keeping the province of each supply on file avoids an inquiry. Do not guess: ask your adviser to confirm, in writing, the place-of-supply treatment of your main services and revisit it when you open a new office.

Exporting services is treated separately from supplying them domestically. Provinces have conditions for relief on exported services, typically linked to the recipient being outside Pakistan and the proceeds being received through banking channels, so keep the contract, the invoice and the bank credit advice for each export together and ask the adviser about the evidence the authority expects.

A short checklist helps at each new contract: where is the client, where is the work done, which province's law names this service, and does an exemption or relief apply? Write the answers into the project file so the invoice carries the right registration number and rate from the start.

Rates, exemptions and returns

Provinces have set different standard rates and lower rates for particular categories, and some services are exempt altogether. Because the schedules differ and change, never copy a rate from another province or from last year. Registered persons file periodic returns with their authority, normally monthly, and the authority publishes the due dates and the treatment of input tax on its website.

A simple illustration with a hypothetical 10 % rate used only for arithmetic: a consultancy bills Rs 400,000 for a project, adds Rs 40,000 of tax, and the client pays Rs 440,000. The Rs 40,000 belongs to the authority and must be reported in the return for that month, not spent as revenue.

Penalties for late registration, late filing and under-declaration are set in provincial law. Registering late does not erase the tax due for the period before registration, and an authority can assess it with a surcharge. If you suspect you crossed a threshold months ago, speak to an adviser before the authority writes to you.

Records that make multi-province work manageable

Every service invoice should show the provincial registration number, the service description, the value, the rate applied and the tax. The business should also be able to say, for each invoice, which province the supply belongs to and why. That mapping is rarely written down, and it is exactly what an authority asks about during a review.

In 4softcrm you can record the client's province and the type of service on the contact, and in 4invoices you issue the PDF invoice with the rate your adviser confirmed. 4b2b does not look up provincial rates, does not register you with any authority and does not file returns; the tools hold the records your adviser works from.

A short monthly schedule is enough: client, province, service, invoice number, value, rate, tax. If it exists for every month, your adviser can prepare each province's return from it, and a review by any authority starts from a document you can explain rather than a pile of messages.

Provincial authorities: PRA in Punjab, SRB in Sindh, KPRA in Khyber Pakhtunkhwa and BRA in Balochistan. Services in the Islamabad Capital Territory are taxed under a federal law administered by FBR. Which one applies depends on where the service is provided, so confirm the position for each major service and record the answer.

Possibly. If you provide taxable services in several provinces, each authority may require registration for the services supplied in its territory. The place-of-supply rules differ, so ask your adviser to confirm in writing where each type of service is taxed, and revisit the question when you open a new office, hire staff in another province or start serving new regions.

No. Each province sets its own rates and exemptions through its finance acts, and they change over time. Never copy a rate from another province or an old invoice. Take the rate from the authority's current schedule or from your adviser and show it on each invoice line so that your clients can see exactly what they are paying.

In practice the NTN is the base identifier, and authorities normally ask for it, with identity documents and proof of address, during registration. Obtain the NTN from FBR first. Each portal has its own steps, forms and supporting documents, so use the authority's current guidance or ask an adviser, and keep the acknowledgement of your application.

No. 4invoices does not connect to PRA, SRB, KPRA, BRA or FBR. It issues PDF invoices showing the details and rate you enter and keeps an archive. Filing returns, paying tax and deciding which province taxes a given service remain your responsibility or your tax adviser's, who can also tell you whether any of your services is exempt.

Information page

This page is informational. Confirm requirements with FBR, the provincial authority or SECP; 4b2b tools cover general invoicing and records only.