Sales Tax Rates in Pakistan 2026
Pakistan splits sales tax between two levels of government, and that split is the single most important thing to get right. Goods are federal, charged under the Sales Tax Act 1990 and administered by FBR. Services are provincial, with each province running its own authority and setting its own rate.
The standard federal rate on goods is 18%. It was raised from 17% to 18% by the Finance (Supplementary) Act 2023 and has stayed there since — so any calculator still applying 17% is producing figures that are a full percentage point short.
Federal sales tax on goods
| Rate | Rate | Applies to |
|---|---|---|
| Standard rateSales Tax Act 1990, section 3(1) | 18% | The default rate for most taxable goods, on local supplies and on imports. Raised from 17% to 18% by the Finance (Supplementary) Act 2023. |
| Higher rateSales Tax Act 1990, Twelfth Schedule | 25% | Specified luxury and imported goods, including certain imported vehicles, applied since March 2023. |
| Reduced rateSales Tax Act 1990, Eighth Schedule | 10% | Specified goods carrying a concessionary rate, such as personal computers and laptops. The Eighth Schedule lists several rates - confirm the entry for your exact item. |
| Zero-ratedSales Tax Act 1990, Fifth Schedule | 0% | Exports and other zero-rated supplies. Output tax is nil but input tax remains reclaimable, which is what distinguishes zero-rating from exemption. |
Provincial sales tax on services
The rate depends on where the service is rendered, not where your business is registered. Punjab is the outlier at 16%; the other jurisdictions charge 15%.
| Jurisdiction | Authority | Standard rate | Tax on PKR 100,000 |
|---|---|---|---|
| Punjab | Punjab Revenue Authority (PRA) | 16% | PKR 16,000 |
| Sindh | Sindh Revenue Board (SRB) | 15% | PKR 15,000 |
| Khyber Pakhtunkhwa | KP Revenue Authority (KPRA) | 15% | PKR 15,000 |
| Balochistan | Balochistan Revenue Authority (BRA) | 15% | PKR 15,000 |
| Islamabad (ICT) | FBR (Islamabad Capital Territory) | 15% | PKR 15,000 |
How to Remove Sales Tax from a Total Amount
To strip tax out of a tax-inclusive price, divide by one plus the rate. At 18% that means dividing by 1.18. Do not subtract 18% of the gross.
The difference is not small and it is the most common error in reverse-GST arithmetic. On a gross price of PKR 11,800:
- Correct: PKR 11,800 ÷ 1.18 = PKR 10,000 net, so the tax inside the price is PKR 1,800.
- Wrong: 18% of PKR 11,800 = PKR 2,124 — overstated by PKR 324, which is 18% of the tax itself.
Switch the calculator above to “Extract tax” and it shows the division step explicitly, so the figures reconcile line-for-line against a real sales tax invoice.
Further Tax, Zero-Rating and Exemption
Further tax at 4%
Section 3(1A) charges further tax of 4% in addition to the standard rate when a registered person supplies taxable goods to someone who has not obtained sales tax registration. On a PKR 10,000 supply at 18%, further tax adds PKR 400 on top of the PKR 1,800 of sales tax, for an invoice total of PKR 12,200. It exists to push buyers into the registration net.
Zero-rated is not the same as exempt
Both mean the customer is charged nothing, but they treat your own input tax in opposite ways. A zero-rated supply under the Fifth Schedule — exports, principally — carries a 0% output rate while input tax on your purchases remains fully reclaimable. An exempt supply under the Sixth Schedule carries no output tax and no input tax recovery, so the tax embedded in your costs becomes an expense you absorb.
For a business with significant input tax, that distinction is worth a great deal more than the identical 0% on the invoice suggests.