Sales Tax in Pakistan — Complete Guide 2025-2026
Sales tax is a consumption tax levied on the sale of goods and services in Pakistan. Administered by the FBR, it is one of the largest sources of government revenue. This comprehensive guide covers everything you need to know about sales tax — from registration to filing and compliance.
What is Sales Tax?
Sales tax is an indirect tax charged at every stage of the supply chain, ultimately borne by the end consumer. Businesses registered for sales tax collect the tax from their customers and remit it to the government. The standard rate is 18%, though certain goods and services are taxed at reduced rates or exempted.
Current Sales Tax Rates in Pakistan
| Category | Rate |
|---|---|
| Standard Rate (Most Goods) | 18% |
| Services (As per Provincial Laws) | 13-16% (varies by province) |
| Reduced Rate Items | 5-12% |
| Zero-Rated Items | 0% |
| Exempt Items | Not applicable |
Sales Tax Registration
Who Must Register?
- Manufacturers with annual turnover exceeding PKR 10 million
- Retailers with annual turnover exceeding PKR 10 million
- Importers of commercial goods
- Service providers (as per respective provincial laws)
Registration Process
- Log in to iris.fbr.gov.pk with your NTN
- Select “Sales Tax Registration”
- Complete the registration form
- Upload required documents (CNIC, business proof, bank statement)
- Pay the registration fee (if applicable)
- Receive your Sales Tax Registration Number (STRN)
Sales Tax Filing Requirements
Registered persons must file sales tax returns on a monthly or quarterly basis. The return includes:
- Total sales (taxable and exempt)
- Total purchases
- Output tax collected
- Input tax claimed
- Net tax payable or refundable
Input Tax Adjustment
Registered businesses can claim input tax adjustment — meaning the sales tax paid on purchases can be adjusted against output tax collected on sales. This ensures that tax is ultimately borne only by the end consumer.
Sales Tax Exemptions
The following items are exempt from sales tax:
- Basic food items (wheat, rice, milk, vegetables)
- Life-saving drugs and medical equipment
- Educational materials (books, school supplies)
- Agricultural inputs (fertilizers, seeds, pesticides)
- Exports (zero-rated)
Penalties for Non-Compliance
- Late filing: PKR 10,000 and PKR 100 per day of delay
- Non-registration: Up to PKR 50,000 penalty
- False declarations: Up to 200% of tax involved
- Non-payment: 3% per month surcharge
Frequently Asked Questions
Is sales tax included in the displayed price?
In Pakistan, the displayed price often includes sales tax. However, registered businesses must show the tax separately on invoices for input tax adjustment purposes.
Can I claim refund of excess input tax?
Yes. If your input tax exceeds output tax (e.g., in case of exports), you can claim a refund from the FBR. Export refunds are typically processed within 30-45 days.