Pakistan Sales Tax (GST) System - Full Guide

GST/Sales Tax in Pakistan

In Pakistan, the term Sales Tax (ST) refers to a Value-Added Tax (VAT)-like system applied to the sale and import of goods and certain services. The sales tax system is administered by the Federal Board of Revenue (FBR) under the Sales Tax Act, 1990, and by provincial revenue authorities for services.

Pakistan operates under a dual sales tax system, meaning:

• The Federal Government applies Sales Tax on goods.
• Provincial Governments apply Sales Tax on services.

📊 Sales Tax Rates in Pakistan

The following are the standard sales tax rates currently applicable in Pakistan:

🔹 Standard Sales Tax: 18%

Applicable to most goods and taxable services.

🔸 Reduced Rate: 12%, 14%, or 15%

Applies to specific sectors or under special conditions (e.g., electricity, mobile services).

🟢 Zero-Rated (0%)

Mainly for exports and essential goods (e.g., certain food items, pharmaceuticals).

🚫 Exempt Supplies

Basic necessities, educational services, books, certain agricultural items.

Note: Each province has its own service tax rate (usually between 13%-16%), applied under laws like the Sindh Sales Tax on Services Act or Punjab Sales Tax on Services Act.

🏢 Who Needs to Register for Sales Tax in Pakistan?

✅ Mandatory Sales Tax Registration:

A business must register with FBR if:

• Annual turnover exceeds PKR 10 million
• Engaged in manufacturing, importing, or supplying taxable goods
• Providing taxable services (federal or provincial)

📝 Voluntary Registration:

Businesses under the threshold may opt for voluntary registration to claim input tax credits and improve credibility.

🌍 Sales Tax & Foreign Digital Service Providers

Under SRO 1190(I)/2019 and relevant provincial laws, non-resident digital service providers must:

• 📌 Register for Sales Tax in Pakistan
• 💳 Collect and remit sales tax on digital services
• 🔄 File periodic returns

Applicable services include:

• Streaming platforms (e.g., Netflix)
• Online advertising (Google, Meta)
• SaaS tools and cloud storage
• E-learning platforms, gaming, etc.

🔢 Sales Tax Number Format in Pakistan

Once registered, the FBR issues an STRN (Sales Tax Registration Number).

Format: XXXXXXXXXXXXXX (13-digit number)

This number is required for:

• Filing sales tax returns
• Issuing tax invoices
• Claiming input tax

🧾 Invoice Requirements in Pakistan

All registered persons must issue tax invoices containing:

• Supplier’s name, address, and STRN
• Buyer’s name and STRN (if applicable)
• Invoice number and date
• Description, quantity, and value of goods/services
• Rate and amount of sales tax
• Total amount payable

Invoices must be retained for 6 years for audit and compliance.

🧮 Sales Tax Calculation Example

Scenario:

A manufacturer sells electronics worth PKR 500,000 (exclusive of tax)

• Sales Tax @18% = PKR 90,000
• Total Payable = PKR 590,000
• If input tax (e.g., on raw materials) = PKR 40,000
• Net tax to be paid = PKR 50,000

📅 Filing & Payment of Sales Tax

🗓️ Frequency:

Sales tax returns must be filed monthly.

⏰ Due Dates:

• By 18th of each month (submission)
• By 15th (payment through bank)
• Deadlines vary slightly between federal and provincial authorities

💻 Filing Portals:

• FBR Portal for goods: https://iris.fbr.gov.pk
• Provincial portals (e.g., PRA, SRB, KPKRA, BRA) for services

📥 Imports & 📤 Exports

Imports:

• All imports are subject to sales tax at the standard rate
• Collected at the customs stage by FBR

Exports:

Zero-rated (0%) for:

• Direct export of goods
• Specific services as defined by law

Exporters may claim input tax refunds

🚫 Exempt Goods & Services

Some items are exempt from Sales Tax:

• Unprocessed agricultural produce
• Educational and health services
• Printed books and newspapers
• Basic food items
• Charitable institutions

Exempt businesses cannot claim input tax refunds.

✅ Compliance Checklist for Pakistan Sales Tax

• ✔️ Register with FBR or provincial authorities
• ✔️ Obtain STRN and display it on invoices
• ✔️ File monthly tax returns on time
• ✔️ Maintain proper tax invoices and records
• ✔️ Claim input tax where eligible
• ✔️ Comply with provincial sales tax laws (for services)
• ✔️ Submit to audit and provide documentary proof when required

Pakistan’s GST/Sales Tax system continues to evolve toward digitalization and improved enforcement. Businesses - local and international must understand federal and provincial tax obligations, especially in sectors like e-commerce and digital services.

👉 Use GSTCal.org to access our Pakistan Sales Tax Calculator for fast, reliable, and up-to-date tax computation.