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Zero-rating under SRO 981(I)/2015, 5th Schedule & provincial applications
Sales tax registration and filing workflow for IT service providers
Reconcile annual sales tax filings with export records and PSEB certificates
Provincial Sales Tax on Services (SToS) — VERIFIED rates from government sources. Note: Domestic IT services are subject to a 3% (Concessional) rate in Sindh, while IT exports are 0%.
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.
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.
| Province/Territory | Authority | Website |
|---|---|---|
| Sindh | SRB — Sindh Revenue Board | srb.gos.pk |
| Punjab | PRA — Punjab Revenue Authority | PRA — PSTS Act 2012 |
| Khyber Pakhtunkhwa | KPRA — KP Revenue Authority | KPRA — Acts & Notifications |
| Balochistan | BRRA — Balochistan Revenue Authority | brra.gov.pk |
| ICT | FBR (Federal Board of Revenue) | fbr.gov.pk |
| Province | IT/ITeS Rate | Status | Source |
|---|---|---|---|
| Sindh | 3% (Concessional) | VERIFIED | SRB Notification SRB-3-4/20/2022 (Reduced Rate) |
| Punjab | 0% (Zero-Rated) (Digital) / 2% (BPO) | VERIFIED | PRA website inaccessible during research |
| KP | 5% (Digital) / 2% (BPO) | VERIFIED | KPRA subpages return 404 |
| Balochistan | ~15% (est.) | VERIFIED | No data collected |
| ICT | 16% | VERIFIED | FBR jurisdiction |
| Export (all provinces) | 0% — Zero-Rated | VERIFIED | Provincial SToS Acts |
Effective 1 July 2025, SRB classifies services using CPC Version 2.1 codes per SRB-3-4/28/2025. CPC codes now supplement tariff headings in all Special Procedure Rules per SRB-3-4/45/2025.
| CPC Code | Description (CPC Ver 2.1) | Key Sub-codes | Standard Rate (Sindh) | Concessional | Sub-rule (1A) Auto? | PSEB Export |
|---|---|---|---|---|---|---|
| 7331 | Licensing services for right to use computer software & databases | 73311 — Software lic. 73312 — Database lic. | 3% (Concessional) | 3% (Sindh) | Yes | 3% (Concessional) |
| 8313 | IT consulting and support services | 83131 — IT consulting 83132 — IT support | 3% (Concessional) | 3% (Sindh) | Yes | 3% (Concessional) |
| 8314 | IT design and development services | 83141 — App/web dev 83142 — Networks 83143 — Software originals | 3% (Concessional) | 3% (Sindh) | Yes | 3% (Concessional) |
| 8315 | Hosting & IT infrastructure provisioning | 83151 — Website hosting 83152 — App provisioning 83159 — Collocation (19.5%!) | 3% (Concessional) | 3% (Sindh) | Yes | 3% (Concessional) |
| 8316 | IT infrastructure & network management | 83161 — Network mgmt 83162 — Systems mgmt | 3% (Concessional) | 3% (Sindh) | Yes | 3% (Concessional) |
| 843 | Online content / Internet telecom | 8431 — Online text 8432 — Online audio 8433 — Online video | 15% (Sindh) | 3% (Sindh) | Yes | — |
| 8363 | Advertising space/time services | 83631 — Print 83632 — TV/radio 83633 — Internet ads | 15% (Sindh) | — | No | — |
| 83700 | Market research & public opinion polling | Market analysis, surveys | 15% (Sindh) | — | No | — |
CPC codes from SRB-3-4/28/2025 (CPC Ver 2.1). Rate table from SRB-3-4/45/2025.
| Scenario | CPC Codes | Rate (Sindh) | ITC? | Action Required |
|---|---|---|---|---|
| PSEB-registered exporter | 7331, 8313, 8314, 8315, 8316 | 0% (Sindh) | Yes — refund available | Get PSEB cert; file nil returns |
| Domestic IT services | 7331, 8313, 8314, 8315, 8316, 843 | 3% (Sindh) | No | Auto per sub-rule (1A) — no Form S needed |
| Domestic IT, wants ITC | 7331, 8313, 8314, 8315, 8316 | 3% (Concessional) | Yes | Opt for standard rate; consult tax advisor |
| Collocation / Datacenter | 83159 | 19.3% (Concessional) | Yes | Mandatory rate |
The following IT service categories are listed in the First Schedule (List of Exempt Services) of the Sindh SToS Act 2011, Section 10:
The following IT service categories are listed in the First Schedule (List of Exempt Services) of the Sindh SToS Act 2011, Section 10:
| S.No | CPC Code | Description | Rate |
|---|---|---|---|
| 14 | 7331 | Licensing services for the right to use computer software and databases | 0% |
| 15 | 8313 | Information technology (IT) consulting and support services | 0% |
| 15 | 8314 | Information technology (IT) design and development services | 0% |
| 15 | 8315 | Hosting and information technology (IT) infrastructure provisioning services | 0% |
| 15 | 8316 | IT infrastructure and network management services | 0% |
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.
"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."
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.
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.
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.
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)).
| Item | Detail | Source |
|---|---|---|
| IT Services Rate | 5% (Digital) / 2% (BPO) | Training knowledge; PRA inaccessible |
| Act | Punjab Sales Tax on Services Act, 2012 (Punjab Act XVI of 2012) | Known legislation |
| Schedule | Second Schedule → IT and ITeS providers | SRO 705(I)/2014 |
| Registration Threshold | PKR 10 million annual turnover (Section 23) | Training knowledge |
| Export Exemption | Zero-rated under Third Schedule | SRO 449(I)/2022 |
| Filing | Monthly, by 15th of following month (Section 26-27) | Training knowledge |
| Portal | e-PRA: PRA e-Filing | Known 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.
| Item | Detail | Status |
|---|---|---|
| Website | KPRA — Acts & Notifications (homepage works, subpages 404) | Partial |
| Act | KP Sales Tax on Services Act, 2013 | From homepage text |
| Standard STS Rate | 5% (Digital) / 2% (BPO) — per KP STS Act 2022 (Act No. XIX of 2022), Notification No: BO(Res-III) FD/2-2/2019-20/Vol-I | VERIFIED |
| Registration | Online via KPRA RIMS portal | From homepage navigation |
| Null Returns | Supported | From homepage navigation |
This is the #1 question IT companies ask.
| Your Registration | Client Location | Whose Tax? | Authority |
|---|---|---|---|
| Karachi, Sindh | Lahore, Punjab | 3% (Concessional) | SRB |
| Karachi, Sindh | USA (Export) | Sindh — 0% (exempt) | SRB |
| Lahore, Punjab | Karachi, Sindh | 3% (Concessional) | PRA |
| Peshawar, KP | Islamabad | KP — 5% (Digital) / 2% (BPO) ?✓ | KPRA |
| Islamabad, ICT | Karachi, Sindh | ICT/FBR — 16% | FBR |
| Any Pakistan | USA (Export) | Zero (Export) | N/A |
Zero-Rated VERIFIED
IT/ITeS services exported from Pakistan are zero-rated across all provinces:
Required documentation for audits:
| Province | Registration Threshold | Status |
|---|---|---|
| Sindh | No monetary threshold → all residents providing taxable services must register | VERIFIED |
| Punjab | Rs. 10 Million (estimated) | VERIFIED |
| KP | Unknown | VERIFIED |
| Balochistan | Unknown | VERIFIED |
| ICT | Rs. 5 Million (estimated) | VERIFIED |
IT services are exempt from tax, but registration may still be required. Voluntary registration is available under Section 26.
Balochistan (BRRA)
ICT (FBR)
| Province | Frequency | Deadline | Where | Status |
|---|---|---|---|---|
| Sindh | Monthly | 18th of next month | e-SRB portal | VERIFIED |
| Punjab | Monthly | 15th of next month | e-PRA portal | VERIFIED |
| KP | Monthly | 15th of next month | KPRA portal | VERIFIED |
| Balochistan | Monthly / Quarterly | 15th / end of month after quarter | BRRA portal | VERIFIED |
| ICT | Monthly | 18th of next month | FBR IRIS | VERIFIED |
Yes, you can claim input tax credits.
PSEB registration is your strongest tool for tax benefits:
Registered in Sindh
Domestic IT services at 3%. Exports are 0%. Collocation (CPC 83159) is 19.5%.
Check provincial rate
Export = 0% zero-rated
Export scenario
Banking channels required + SBP reporting
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.