Provincial sales tax on services, with a reduced IT-services option.
Sales tax
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Rate applied
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Tax-inclusive total
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Services are taxed by the province, not the centre
One quirk surprises every new consultant in Pakistan: the federal government does not tax services. Sales tax on services is a provincial matter, so a marketing agency in Karachi, a salon in Lahore, and an IT firm in Peshawar each answer to a different revenue authority and a different rate. This calculator covers all five jurisdictions, Sindh through the Sindh Revenue Board (SRB), Punjab through the Punjab Revenue Authority (PRA), Khyber Pakhtunkhwa through the KP Revenue Authority (KPRA), Balochistan through the Balochistan Revenue Authority (BRA), and Islamabad Capital Territory, and it applies the standard rate or the reduced IT rate to the amount you enter.
Because each province sets and revises its own rate through its annual finance act, the percentages drift apart and change over time. Read the figures here as the rates this calculator currently applies and confirm the live rate with the relevant provincial authority before you raise an invoice. The structure, a percentage of the service value charged on top and remitted to the province, is stable; the exact number is what moves.
A PKR 500,000 invoice, standard versus IT
Suppose you bill PKR 500,000 for a service in Sindh. At the standard SRB rate this calculator applies, 15 percent, the sales tax is PKR 75,000 and the tax-inclusive total your client pays is PKR 575,000. Now flag the same invoice as IT or IT-enabled services. The reduced rate this tool uses, 5 percent, drops the tax to PKR 25,000 and the total to PKR 525,000, a saving of PKR 50,000 on a single invoice. Had the work been in Punjab, the PRA standard rate the calculator applies is 16 percent, giving PKR 80,000 of tax, which is why the province field matters as much as the amount.
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The chart compares the tax on the current invoice amount at the selected rate versus the remaining after-tax amount.
The reduced IT rate has strings attached
The lower rate for IT and IT-enabled services is a real concession, but it is rarely automatic. Provinces typically require the service to fall within a defined list, the provider to be registered, and conditions to be met, such as receiving payment through banking channels and forgoing input tax adjustment in some schemes. The reduced rate also tends to apply only to genuinely IT and IT-enabled work, not to every invoice an IT company raises. Before you bill at the lower rate, confirm with your province that your service qualifies, because applying it wrongly leaves you owing the difference plus possible penalties.
Tax-inclusive or tax-exclusive on the invoice
A frequent error is muddling whether the quoted fee already includes the tax. This calculator treats your entered amount as the value before tax and adds the sales tax on top, which is the normal business-to-business convention. If you quoted a client an all-in figure, the tax is buried inside it and you are absorbing it from your own fee. A practical habit is to state explicitly on every quote that the price is exclusive of provincial sales tax, so the liability is clearly the client's and there is no awkward conversation when the invoice lands.
Cross-province work adds a wrinkle worth flagging: where a service is rendered, where the client sits, and where you are registered can pull two authorities toward the same transaction, and the rules on which province has the right to tax can overlap. This tool is built for service providers and finance staff who need a fast, correct tax line per province, freelancers, agencies, consultants, and salons among them. To set a retail price that already contains the tax, use the GST-inclusive pricing calculator, and to estimate the output tax across a year of turnover use the sales tax registration calculator.
Can I claim input tax against provincial sales tax on services?
Often yes, but it depends on the province and the scheme. Under standard-rate registration you can usually adjust input tax on related purchases against your output tax, whereas many reduced-rate IT regimes are offered on the condition that you give up input adjustment. Check the specific terms with your provincial authority, because the trade-off between a lower rate and lost input credit can change which option costs you less.
Which province taxes my service if my client is in another city?
This is one of the genuinely contested areas. Provinces variously claim the right to tax based on where the service is performed, where it is consumed, or where the provider is registered, and for some services more than one authority asserts a claim. Because double taxation disputes do arise, a provider working across provinces should take advice on place-of-supply rules rather than assume their home province is the only one that can charge.