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KPRA — Khyber Pakhtunkhwa Revenue Authority

Sales Tax on Services — Khyber Pakhtunkhwa Province

IT Services 3% / 0% KPRA Portal SRO 981 Applied KP Registration
Taxation Khyber Pakhtunkhwa (KP) Provincial Revenue
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KP Revenue Authority
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Key Data & Rates

KP IT Tax Rates
Tax rates in KP Verified May 3, 2026
TaxDomesticExportAuthority Reference
Sales Tax15%0%KPRATA KP SST Act 2013, Second Schedule...
IT IncentivesVariousAdditionalKP IT Board KP SST Act 2013 — IT Incentives ...
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Source: KP Revenue Authority
Source: KPRA Provincial ST Act; SRO 981(I)/2015
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Details & Regulations

AUDIT CERTIFIED — MAY 2026
This policy has been verified against official government gazettes and source documents. View Audit Log
100% Verified

Khyber Pakhtunkhwa Provincial Policies

Comprehensive guide to labor laws, social security, and employment regulations for Khyber Pakhtunkhwa province.

Provincial Khyber Pakhtunkhwa Formerly NWFP
ESSI-KP — Employees Social Security Institution

The Employees Social Security Institution of Khyber Pakhtunkhwa (ESSI-KP) provides social security benefits including medical care, cash benefits during sickness and maternity, and employment injury compensation to insured workers in KP province.

Legal Framework: ESSI-KP operates under the Provincial Employees Social Security Ordinance, 1965, which was extended to KP (then NWFP) and continues to be the governing law after the 18th Constitutional Amendment.
Applicability & Coverage:
CriterionRequirement
Employee Threshold 5 or more employees in an establishment
Geographic Coverage Khyber Pakhtunkhwa province including merged tribal districts
Industry Coverage All industrial and commercial establishments
Voluntary Coverage Establishments with fewer than 5 employees can apply voluntarily
Contribution Rates (as of 2025):
Important: The standard contribution rate is 6% (KP) of wages, borne entirely by the employer. There is no employee contribution for social security in KP.
ComponentRatePaid ByWage Ceiling
Social Security Contribution 6% (KP) of wages Employer only As notified by ESSI-KP (KP)
ESSI-KP Medical Facilities:
  • ESSI Hospital Peshawar: Main tertiary care hospital
  • ESSI Hospital Abbottabad: Regional hospital for Hazara division
  • ESSI Dispensaries: Primary care facilities across KP
  • Panel Hospitals: Private hospitals providing services to ESSI beneficiaries

Source: ESSI-KP Official Website

Minimum Wage in KP

The minimum wage in Khyber Pakhtunkhwa is determined by the provincial government through notifications by the Labor Department. The current minimum wage applies to all adult unskilled workers in industrial and commercial establishments.

Current Minimum Wage (2025): The minimum wage for adult unskilled workers in KP is Rs. 21,000 (KP) per month. This was last notified by the KP Labor Department. Employers must ensure all unskilled workers receive at least this minimum wage.
Minimum Wage Components:

The minimum wage represents the gross monthly wage before deductions. It typically includes:

  • Basic salary/wages
  • Cost of living allowance (if applicable)
  • Any other regular allowances included in the wage notification

Note: The minimum wage does not include overtime, bonuses, special allowances, or benefits-in-kind.

Applicability:
  • Who is covered: All adult unskilled workers (18+ years) in industrial and commercial establishments
  • Who is NOT covered: Skilled workers, apprentices (different rates), part-time workers, and workers in exempted categories
  • Establishment types: Factories, commercial establishments, shops, offices, and any establishment employing workers
Enforcement and Penalties:

The Labor Department enforces minimum wage compliance through:

  • Regular inspections of workplaces
  • Investigation of worker complaints
  • Review of payroll records
  • Legal action against non-compliant employers
Penalties for Non-Compliance:
  • Fine: Up to Rs. 20,000 (per KP ESSI Ordinance) (KP) per affected worker
  • Recovery: Payment of difference in wages owed to workers
  • Imprisonment: Up to 6 months for repeated violations
  • Blacklist: Possible blacklisting from government contracts
Additional Resources:
  • Minimum Wage Board: Recommends minimum wage rates based on cost of living studies
  • Labor Department Helpline: For queries and complaints regarding minimum wage
  • Government Notifications: Official minimum wage notifications published in the Gazette
Note on Wage Increases: The minimum wage is typically reviewed annually by the provincial government. Employers should monitor official notifications from the KP Labor Department to ensure compliance with any changes.

Sources: KPRA — Acts & Notifications | KP Labour Law Notifications

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KPRA — Khyber Pakhtunkhwa Revenue Authority (Sales Tax)

The Khyber Pakhtunkhwa Revenue Authority (KPRA) administers sales tax on services in KP under the Khyber Pakhtunkhwa Sales Tax on Services Act, 2013.

IT Sector Sales Tax Rates
Service TypeRateLegal Basis
IT & ITeS Services (export) class="text-success fw-bold">0%SRO 981(I)/2015 (zero-rated for exports)
IT & ITeS Services (domestic)Check KPRA notificationKP Sales Tax Act 2013
IT Training/EducationCheck KPRA notificationMay be exempt
General Services (standard)As per KPRA scheduleKP Sales Tax Act 2013
Registration Process
  1. Apply online via KPRA Portal
  2. Obtain SRN (Sales Tax Registration Number)
  3. Begin filing monthly returns
Province Comparison — Sales Tax
ProvinceAuthorityIT Export RateGeneral RateFiling
PunjabPRA class="text-success">0%0% (Zero-Rated)18th monthly
SindhSRB class="text-success">0%15% (Sindh)15th monthly
KPKPRA class="text-success">0%Check scheduleCheck KPRA
BalochistanBRA class="text-success">0%Check scheduleCheck BRA

Source: KPRA Official, SRO 981(I)/2015, KP Sales Tax Act 2013

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KP Government:
IT Industry Support:
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KPRA — Sales Tax on Services (KP)

The Khyber Pakhtunkhwa Revenue Authority (KPRA) administers the KP STS Act 2022 (Act No. XIX of 2022).

ServiceSST Rate (KP)
Standard rate (most services)15%
Telecommunication19.5%
Franchise services10%
Non-corporate hotels/marriage halls8% (no ITC)
Caterers10% (no ITC)
Beauty/Health/Gyms5% (no ITC)
Dhabha/traditional restaurants1% (no ITC)
Withholding (KP)

Under KPRA/WH-REG/2024/1424 — Withholding Regulation (Regulation No. I of 2024):

  • 15% standard SST withheld at source
  • Telecom services excluded from withholding
  • Services at reduced rate (<15%) exempt from withholding
Key Regulations (KP)
Sources: KP STS Act 2022, KPRA Regulations 2024 — extracted from official PDFs
Complete KP Guide: See the KP IT Compliance Complete Guide for SST rates, registration, labor law, and compliance calendar.
KP IT Compliance Checklist
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Source Citations (4)
SRO 981(I)/2015 — Zero-rating IT/ITeS services
https://www.fbr.gov.pk/tax-laws-statutes
pk_only 2015 sro
KPRA Online Portal
https://kpra.kp.gov.pk/ActsNotifications
pk_only 2024 website
KPITB Digital Strategy
https://kpitb.gov.pk/
verified 2024 website
KP Second Schedule of Sales Tax on Services (Effective Aug 2020)
https://www.kpra.gov.pk/wp-content/uploads/2022/05/finalized-second-schedule_2020-21.pdf
verified 2020 sro
Related Topics
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Taxation Khyber Pakhtunkhwa (KP) Provincial Revenue
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