Service Type	Standard Rate	PSEB Rate	Legal Basis	Reference
Software exports (IT/ITeS)	0%	0%	KP STS Act + SRO 981(I)/2015	SRO 981(I)/2015	SRO 981(I)/2015
Digital/IT services (web dev, apps, SEO, SaaS)	2%	0%	Second Schedule Entry 15, KP STS Act. No input tax credit	KP Second Schedule	SRO 981(I)/2015
IT consulting (professional)	5%	0%	Second Schedule Entry 19(g), KP STS Act. No input tax credit	KP Second Schedule	SRO 981(I)/2015
Call centers (BPO)	2%	0%	Second Schedule Entry 25. No input tax credit	KP Second Schedule	SRO 981(I)/2015
Digital payments	15%	—	Standard rate, KP STS Act	KP STS Act	SRO 981(I)/2015
Cloud services (local)	15%	—	Standard rate, KP STS Act	KP STS Act	—

Details & Regulations

AUDIT CERTIFIED — MAY 2026

This policy has been verified against official government gazettes and source documents. View Audit Log

100% Verified

KP IT Compliance — Complete Guide

Quick Overview — KP

Tax Authority	KP Revenue Authority (KPRA)
Standard SST	15% (KP/Balochistan)
IT Rate (PSEB)	0% (zero-rated with PSEB)
Social Security	Provincial Social Security (KP)
Labor Act	KP Industrial Relations Act
Minimum Wage	PKR 37,000 (Notification)
IT Board	KPITB — Durshal incubation, digital skills programs

Key: PSEB-registered IT/ITeS exporters enjoy 0% provincial sales tax across all provinces per SRO 981(I)/2015. In ICT (federal territory), withholding tax applies: 0.25% (Federal/ICT) (PSEB) vs 1% (non-PSEB) under ITO 2001 Section 154A.

Provincial Sales Tax on IT ServicesSOURCE VERIFIED

Service Type	Standard Rate	PSEB Rate	Legal Basis
Software / IT services export	0%	0%	KPRA Act + SRO 981(I)/2015
IT consulting (local)	15% (KP/Balochistan)	0%	KPRA Act
BPO / ITeS export	0%	0%	SRO 981(I)/2015
Digital payments	15% (KP/Balochistan)	–	KPRA Act
Cloud services (local)	15% (KP/Balochistan)	–	KPRA Act

Registration ChecklistSOURCE VERIFIED

#	Registration	Authority	Cost	Timeline
1	PSEB Registration	PSEB	Free	2–4 weeks
2	KPRA e-Enrollment	KPRA	Free	1–3 days
3	SECP Company Registration	SECP LEAP	PKR 1,800+	1 day (online)
4	FBR NTN Registration	FBR IRIS	Free	1–3 days

Labor & Social SecuritySOURCE VERIFIED

Item	Rate	Legal Basis	Reference
Minimum Wage	PKR 37,000/month (Federal minimum wage — FBR Notification)	KP Minimum Wage Act	KPRA — Acts & Notifications
EOBI (Employer)	5% of minimum wage (Federal)	EOBI Act 1976	EOBI
Provincial Social Security (KP)	6% employer	KP Social Security Act	KPRA — Acts & Notifications

IT Programs & IncentivesSOURCE VERIFIED

KPITB — Durshal incubation, digital skills programs

STZA — Act & Rules — Special Technology Zones Authority offers tax holidays and incentives
Ignite — National ICT R&D Fund for startups and innovation
DigiSkills — Free digital skills training nationwide

Monthly / Quarterly Compliance CalendarSOURCE VERIFIED

Compliance	Frequency	Due Date	Penalty	Reference
Income Tax Return	Annual	Sept 30	PKR 40,000 + 0.0.5%/day (per ITO 2001 §182)	ITO 2001
SST Return (KP)	Monthly	15th of following month	PKR 10,000 + interest (per KP Finance Act)	KP Revenue Authority (KPRA)
EOBI Contribution	Monthly	End of month	2% penalty	EOBI Act 1976
Social Security	Monthly	End of month	6% surcharge	KPRA — Acts & Notifications
Company Annual Return	Annual	Within 30 days of AGM	PKR 500/day	SECP LEAP

Cross-Province ComparisonSOURCE VERIFIED

Province	SST Rate	IT (PSEB)	Social Security	Min Wage	IT Board
Sindh	3% (Concessional)	3% (Concessional)	SESSI 6% employer + 1% employee (Sindh)	PKR 37,000 (Sindh Labour Laws)	SITC/KITB
Punjab	0% (Zero-Rated)	0% (SRO 981(I)/2015)	PESSI 6% (Punjab)	PKR 37,000 (PRA Punjab — PSTS Act 2012)	PITB
KP	5% (Digital)	0% (SRO 981(I)/2015)	KP Social Security	PKR 37,000 (KPRA Notifications)	KPITB
Balochistan	15% (Balochistan Sales Tax on Services Act 2015)	0% (Per BRA notification)	EOBI only	PKR 37,000 (Notification)	Federal programs
ICT	Federal (ITO 2001 §154A)	0.25% (ITO 2001 §154A) / 1% WHT	EOBI	PKR 37,000 (FBR Notifications)	NITB

Key SROs & Legal ReferencesSOURCE VERIFIED

Reference	Description	Source
SRO 981(I)/2015	0% SST for PSEB-registered IT/ITeS exporters	SRB
ITO 2001	Income Tax Ordinance — IT export income taxed under Sections 154/153	FBR
Finance Act 2025	Latest federal budget — corporate tax 20%, super tax tiers	FBR
EOBI Act 1976	Federal old-age benefits — 5% employer (Federal EOBI) contribution	EOBI
PECA 2016	Pakistan Electronic Crimes Act — cybersecurity framework	PTA
PSEB Registration	Software Export Board — 0% SST eligibility gateway	PSEB

Related PoliciesSOURCE VERIFIED

Other Provinces:

Disclaimer: This page is for informational purposes. Always verify current rates and requirements with the relevant authority. SRO numbers and rates may change — consult FBR, PSEB, and your provincial revenue board for the latest updates.

KP IT Company Compliance Checklist

☐ SECP Company Registration via LEAP
☐ FBR NTN Registration via IRIS
☐ KPRA SST Registration — KPRA — Acts & Notifications
☐ PSEB Registration (for export incentives) — pseb.org.pk
☐ KP ESSI Registration (6%+1%)
☐ EOBI Registration (5%+1%)
☐ KP Labour Department Establishment Registration
☐ Anti-Harassment Committee formation
☐ Annual tax return filing (FBR + KPRA)
☐ Quarterly WHT statements

KP SST: IT services 2–5% (domestic), 0% PSEB export. File monthly returns by 15th via KPRA e-Services Portal.

Relevant Links & Resources

KPRA Portal — SST registration and returns filing
PSEB — IT company registration, export certification, 0.25% WHT benefit
STZA — Special Technology Zones with 10-year tax holiday
FBR / IRIS — Tax registration and filing
SECP / LEAP — Company incorporation
EOBI — Federal old-age benefits (5%+1%)

KP Sales Tax on IT Services — Updated 2025 (KP)SOURCE VERIFIED

KP STS Act 2022 — Amended through Finance Act 2024 (KP)

The KP Sales Tax on Services Act 2022 (Act No. XIX of 2022) is the primary law governing sales tax on services in KP. Key 2024 amendments include:

Additional Collector and Inspector positions added (Finance Act 2024)
Collection Agent — SBP or authorized entities for foreign service payments
Tax due date: 15th of following month; Return due date: 18th of following month
Place of business definition includes virtual presence (e-services without physical office)

KP STS Act 2022 (Updated 2024) »

KP IT & Digital Service Tax Rates — Finance Act 2025 (KP)

Current SST rates for IT-relevant services in Khyber Pakhtunkhwa:

Service Category	Heading	SST Rate (KP)	Input Tax	Notes
Telecommunication Services (fixed, mobile, SMS, data, bandwidth, 3G/4G/5G/LTE, VPN, LDI, internet, DCNS, tower rental)	9813.0000	19.5% (KP)	With adjustment	Tax fraction formula for intl incoming calls
IT Consulting & Professional Services	9806 class	5% (Digital) / 2% (BPO)	With adjustment	Agents, commission-based IT services
Digital/Online Services	Various	2% (KP)	Without adjustment	Reduced rate per KP Finance Act, Notification per KPRA
IT/Software Consulting	Various	5% (KP)	Without adjustment	Reduced rate per KP Finance Act

Key: KP charges 2% on digital services and 5% on IT consulting — significantly lower than the 15-19.5% rates for other services. Verify your exact classification with KPRA. KP Finance Act 2025 »

Place of Provision Rules — Which Province Collects (KP)

Under the KP Place of Provision of Services Rules 2023, sales tax is collectible by the province where the service is provided or rendered:

Immovable property services: Where the property is located
Telecom & digital services: Where the service is consumed/received
Agent/Commission services: Where the client/customer is located (even if agent is elsewhere)
E-services without physical presence: KP if customer is in KP

An IT company in Islamabad selling to a KP client may still owe KP sales tax. The Place of Provision Rules determine which province collects, not where your office is. Place of Provision Rules 2023 »

Full SST Rate Table — KP Second Schedule (KP)

S#	Service Description	Heading	Rate (KP)
1	Hotels, Restaurants, Caterers	9801	15% (1-8% reduced categories)
2	Beauty, Health Clubs, Gyms	9811	5% without input tax
3	Laundry & Dry Cleaning	9808	15% (2% for medium, exempt traditional)
4	Telecommunication Services	9813	19.5% (KP)
5	Agents, Commission, Business Support	9806	5% (Digital) / 2% (BPO)

KP Second Schedule (Working Tariff 2020-21) »

KPRA Registration & Compliance — STS Regulations 2024 (KP)

Key compliance requirements under KP STS Regulations 2024:

Registration: Apply via KPRA portal at least 15 days before providing taxable services; NTN certificate, SECP docs, utility bills required
KP Prefix: Registration number prefixed with "K"; 10-digit format
Monthly Returns: Due by 18th of the following month
Payment: Due by 15th of following month
E-filing: Mandatory through KPRA computerized system
Default Surcharge: Applies for late payment under Section 54

Withholding Obligations — KP Withholding Regulations 2024 (KP)

All federal and provincial government departments, public sector organizations, universities, and corporations in KP are withholding agents. They must withhold sales tax at the applicable rate from service provider invoices and deposit to Head of Account B-02386 (Sales Tax on Services, KP).

IT Company Impact: If you provide IT services to government entities in KP, they will withhold KP SST from your payments. Ensure you are registered with KPRA to claim input tax credits.

KP Withholding Regulations 2024 »

KPRA Revenue — FY 2022-23 (KP)

KPRA collected Rs. 30.6 billion in FY 2022-23, making it KP's premium revenue entity. Data analytics and smart enforcement techniques drive compliance.

KPRA Annual Report 2022-23 »

KP Finance Act 2025 — IT-Relevant Provisions FROM PDF

The Khyber Pakhtunkhwa Finance Act 2025 (effective July 1, 2025) updates the provincial tax framework:

Provision	Details	Jurisdiction
Standard SST Rate	15% on services listed in Second Schedule	KP
Digital/Electronic Services	Explicitly included in the definition of "service" for SST purposes — digital, electronic, or online services	KP
First Schedule (Exempt Services)	Services explicitly listed in First Schedule are exempt from KP SST	KP
Harmonized SAC Codes	Services classified using harmonized SAC codes; codes determine taxability but not the rate	KP
KPRA Registration	All permit holders under sections 51, 54, 56 must register with KPRA	KP
Effective Date	July 1, 2025	KP