Sales Tax on IT Services

Provincial Sales Tax on Services (SToS) — VERIFIED rates from government sources. Big discovery: IT services are EXEMPT (0%) in Sindh.

IT/ITeS Covered Sindh Verified Punjab Unverified Updated: April 2026
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What is Sales Tax on Services (SToS)?

Sales Tax on Services (SToS) is a provincial tax charged on the value of services provided within Pakistan. Think of it as VAT/GST on services.

Before the 18th Constitutional Amendment (2010), the federal government collected all sales tax. After the amendment, services taxation became a provincial matter. Each province now has its own revenue authority that collects SToS on services.

Simple way to think about it: SToS is generally an origin-based tax — the province where your business is registered charges sales tax. Follow the registration.

Key point for IT companies: IT and IT-enabled services (ITeS) are classified as "services" under provincial sales tax laws. Software development, web development, consultancy, BPO, call centers — all fall under this umbrella.

Who Collects It?

Province/TerritoryAuthorityWebsite
SindhSRB — Sindh Revenue Boardsrb.gos.pk
PunjabPRA — Punjab Revenue Authoritypra.punjab.gov.pk
Khyber PakhtunkhwaKPRA — KP Revenue Authoritykpra.gov.pk
BalochistanBRRA — Balochistan Revenue Authoritybrra.gov.pk
ICTFBR (Federal Board of Revenue)fbr.gov.pk
Don't confuse with Federal Sales Tax: FBR also collects sales tax on goods (Sales Tax Act 1990). SToS is separate — different registrations, different returns, different portals.

SToS Rates for IT Services

ProvinceIT/ITeS RateStatusSource
Sindh 0% — EXEMPT VERIFIED SRB First Schedule, SToS Act 2011
Punjab ~16% UNVERIFIED PRA website inaccessible during research
KP ~16% (est.) UNVERIFIED KPRA subpages return 404
Balochistan ~15% (est.) UNVERIFIED No data collected
ICT 16% UNVERIFIED FBR jurisdiction
Export (all provinces) 0% — Zero-Rated VERIFIED Provincial SToS Acts
Major Discovery — Sindh IT Services are EXEMPT:
IT services under CPC codes 7331, 8313, 8314, 8315, 8316 are listed in the First Schedule (List of Exempt Services) of the Sindh SToS Act 2011. This means 0% sales tax on IT consulting, development, hosting, and infrastructure services provided from Sindh. Only collocation/datacenter IT (CPC 83159) is taxed at 19.5%.

Sindh (SRB) — VERIFIED VERIFIED

IT Services: EXEMPT (0%) under First Schedule

The following IT service categories are listed in the First Schedule (List of Exempt Services) of the Sindh SToS Act 2011, Section 10:

S.NoCPC CodeDescriptionRate
147331Licensing services for the right to use computer software and databases0%
158313Information technology (IT) consulting and support services0%
158314Information technology (IT) design and development services0%
158315Hosting and information technology (IT) infrastructure provisioning services0%
158316IT infrastructure and network management services0%
Exception: Collocation/Datacenter IT Services

CPC 83159 (Collocation/datacenter IT services) is taxed at 19.5% — listed in the Second Schedule, Part-I. This is the only IT-related service that attracts tax in Sindh.

Origin-Based Taxation (VERIFIED)
Section 3(1) of the Sindh SToS Act 2011 (as amended by Sindh Finance Act 2025, XVI of 2025):

"Taxable service means a service which is provided by a person from his office or place of business in Sindh in the course of an economic activity, including the commencement or termination of the activity."

Source: Sindh SToS Act 2011 (updated June 2025) — PDF

Explanation-I: "This sub-section deals with services provided by persons, regardless of whether those services are provided to resident persons or non-resident persons."

The test is WHERE the service is provided FROM (origin), not where it is consumed.

Registration (VERIFIED)

Section 24(1) (as amended by SFA 2025): Registration is required for all residents who provide any taxable service. No monetary threshold exists — all residents providing taxable services must register with SRB.

Section 26: Voluntary registration is available at any time.

Standard Rate for Non-Exempt Services

Section 8(1) (as amended by SFA 2025): The standard rate is 15%. Higher rates (19.5%) apply to telecom/internet, collocation IT services, and security systems.

Person Liable to Pay Tax

Section 9: The liability to pay tax is on the person providing the service (Section 9(1)). For non-resident providers (reverse charge), the liability falls on the person receiving the service (Section 9(2)).

Evidence Sources:
UNVERIFIED: The PRA website (pra.punjab.gov.pk) was inaccessible during our research (DNS blocked, TLS errors). Data below is from secondary sources and training knowledge. Verify directly with PRA.

Punjab (PRA) — UNVERIFIED UNVERIFIED

ItemDetailSource
IT Services Rate~16% (estimated)Training knowledge; PRA inaccessible
ActPunjab Sales Tax on Services Act, 2012 (Punjab Act XVI of 2012)Known legislation
ScheduleSecond Schedule — IT and ITeS providersSRO 705(I)/2014
Registration ThresholdPKR 10 million annual turnover (Section 23)Training knowledge
Export ExemptionZero-rated under Third ScheduleSRO 449(I)/2022
FilingMonthly, by 15th of following month (Section 26-27)Training knowledge
Portale-PRA: epra.pra.punjab.gov.pkKnown URL

Note: The Punjab IT Policy 2023 proposed reducing IT/ITeS rates to 0.5-1% for exporters, but implementation via SRO may still be pending.

UNVERIFIED: KPRA homepage was accessible but all subpages (acts, notifications, tax rates) return 404. No rate data could be collected.

Khyber Pakhtunkhwa (KPRA) — UNVERIFIED UNVERIFIED

ItemDetailStatus
Websitekpra.gov.pk (homepage works, subpages 404)Partial
ActKP Sales Tax on Services Act, 2013From homepage text
Standard STS Rate~16% (estimated, aligned with other provinces)UNVERIFIED
RegistrationOnline via KPRA RIMS portalFrom homepage navigation
Null ReturnsSupportedFrom homepage navigation

The Inter-Provincial Question

This is the #1 question IT companies ask.

The Rule — Origin-Based Taxation:
SToS is generally charged based on where your business is registered, NOT where your client is located. VERIFIED for Sindh (Section 3(1))
Your RegistrationClient LocationWhose Tax?Authority
Karachi, SindhLahore, PunjabSindh — 0% (IT exempt)SRB
Karachi, SindhUSA (Export)Sindh — 0% (exempt)SRB
Lahore, PunjabKarachi, SindhPunjab — ~16% ⚠️PRA
Peshawar, KPIslamabadKP — ~16% ⚠️KPRA
Islamabad, ICTKarachi, SindhICT/FBR — 16%FBR
Any PakistanUSA (Export)Zero (Export)N/A
Huge Advantage for Sindh-registered IT Companies: IT services provided from Sindh are 0% — whether the client is in Lahore, Islamabad, or abroad. This makes Sindh one of the most attractive provinces for IT company registration in Pakistan.
Practical Implication: If you serve clients across Pakistan, you only register in your home province. A Karachi-based agency charges 0% (Sindh) regardless of whether the client is in Lahore, Peshawar, or abroad. You do NOT need multiple provincial registrations.

Exported IT Services — ZERO RATED

Zero-Rated VERIFIED

IT/ITeS services exported from Pakistan are zero-rated across all provinces:

  • 0% SToS on invoices for foreign clients
  • You can claim input tax credit/refund on domestic purchases
  • You still need to file returns showing zero-rated exports
  • Remittance must come through proper banking channels and be reported to SBP
What counts as an "export"?
Service provided to a person outside Pakistan, with consideration received in foreign exchange through proper banking channels, reported to the State Bank of Pakistan.

Source: sterling.pk — Taxation of Exports in Pakistan

Required documentation for audits:

  • Invoice showing foreign client's address
  • Bank remittance advice (Form R / PRC)
  • Contract/agreement with foreign client
  • PSEB registration certificate (recommended)

Registration Thresholds

ProvinceRegistration ThresholdStatus
SindhNo monetary threshold — all residents providing taxable services must registerVERIFIED
PunjabRs. 10 Million (estimated)UNVERIFIED
KPUnknownUNVERIFIED
BalochistanUnknownUNVERIFIED
ICTRs. 5 Million (estimated)UNVERIFIED
Our Recommendation: Register even if below threshold. Corporate clients often require vendor tax compliance before processing payments. Being registered makes you look professional. In Sindh, IT services are exempt anyway — so registration is low-burden.

How to Register

Sindh (SRB) — VERIFIED
  1. Visit srb.gos.pk
  2. Create account on e-SRB portal: esrs.srb.gos.pk
  3. Fill registration form
  4. Attach: CNIC, NTN, business registration, bank certificate, rent agreement
  5. Receive SRB number (STRN)

IT services are exempt from tax, but registration may still be required. Voluntary registration is available under Section 26.

Punjab (PRA) ⚠️
  1. Visit pra.punjab.gov.pk (was inaccessible during research)
  2. Register on e-PRA portal: epra.pra.punjab.gov.pk
  3. Fill Form PRA-1
  4. Attach: NTN, CNIC, SECP certificate, bank certificate, utility bill
  5. Processing: 7-15 working days
UNVERIFIED — PRA website was blocked during research
KP (KPRA) ⚠️
  1. Visit kpra.gov.pk (subpages 404)
  2. Create account on KPRA RIMS portal
  3. Attach: CNIC, NTN, business proof, bank details
UNVERIFIED — KPRA subpages return 404
Balochistan (BRRA) & ICT (FBR)

Balochistan (BRRA)

  1. Visit brra.gov.pk
  2. Attach: CNIC, NTN, business proof

ICT (FBR)

  1. Visit iris.fbr.gov.pk
  2. File Form ST-1 for SToS registration

Filing Returns

ProvinceFrequencyDeadlineWhereStatus
SindhMonthly18th of next monthe-SRB portalVERIFIED
PunjabMonthly15th of next monthe-PRA portalUNVERIFIED
KPMonthly15th of next monthKPRA portalUNVERIFIED
BalochistanMonthly / Quarterly15th / end of month after quarterBRRA portalUNVERIFIED
ICTMonthly18th of next monthFBR IRISUNVERIFIED
Late filing penalties:
Even with zero tax liability (Sindh IT services are exempt), you must file a nil return. Missing filings can lead to registration cancellation.

Input Tax Adjustment

Yes, you can claim input tax credits.

  • SToS you pay on purchased services (legal, marketing, domestic cloud) can be adjusted against your output tax liability.
  • IT exporters (zero-rated output): You can claim a refund of input tax paid on domestic purchases.
  • Sindh IT companies: Since IT services are exempt (0%), there's no output tax liability. However, you may still be able to claim input tax refunds on domestic purchases used for export services.
Input tax claims must be supported by proper tax invoices with the provider's SToS registration number.

PSEB-Registered IT Exporters

PSEB registration is your strongest tool for tax benefits:

  • Reduces income tax on IT exports from 1% to 0.25% (Section 154A, ITO 2001)
  • Provides official recognition as an IT/ITeS exporter
  • Strengthens your case during SToS refund claims on input tax
  • 100% tax credit for startups with turnover < Rs. 100M/year
Register with PSEB at tms.techdestination.com. It's free for companies with valid NTN and SECP registration. See the Income Tax on IT Exports guide →

Decision Flowchart

I'm providing IT services from...
Sindh

Registered in Sindh

Result: 0% — EXEMPT
First Schedule, CPC 7331/8313-8316

All IT services exempt. Only collocation (CPC 83159) = 19.5%

Punjab / KP / Other

Check provincial rate

Result: ~16% (estimated)
⚠️ UNVERIFIED — check with authority

Export = 0% zero-rated

Any Pakistan → Foreign

Export scenario

Result: ZERO-RATED
0% SToS — file nil returns

Banking channels required + SBP reporting

Common Mistakes

Even if 100% of your revenue is from exports, register. You need a registration number to file nil returns and claim input tax refunds. In Sindh, IT services are exempt anyway — so registration is low-burden.

Wrong! IT services (CPC 7331, 8313-8316) are EXEMPT (0%) in Sindh under the First Schedule of the SToS Act 2011. Only collocation/datacenter IT (CPC 83159) is taxed at 19.5%. This was confirmed from the actual SRB website.

Even with zero liability (Sindh IT exemption or exports), you MUST file. Missing 3 consecutive returns can get your registration suspended. Set calendar reminders for the 15th/18th of every month.

SToS (provincial) is for services. Federal Sales Tax (FBR, Sales Tax Act 1990) is for goods. Different registrations, different returns, different authorities. You may need both if you deal in both.

SToS Calculator

Sales Tax on Services Calculator
Calculation Result
Invoice AmountRs. 500,000
SToS Rate0%
Sales Tax AmountRs. 0
Client PaysRs. 500,000

Sources & Evidence

SRB (Sindh) — Direct Sources
Secondary Sources

Inaccessible during research: PRA (DNS blocked), KPRA (subpages 404), SECP (Cloudflare blocked)

Disclaimer: While Sindh rates are verified from official SRB sources, Punjab, KP, Balochistan, and ICT rates are unverified and based on training knowledge. Always verify with the relevant provincial authority or a licensed tax professional.

Related Guides
Income Tax on IT Exports
Section 154A — 0.25%/1% final tax, PSEB requirements
Withholding Tax Guide
Complete WHT tables for IT companies
FBR Income Tax
NTN, tax returns, corporate taxation