PRA Sales Tax on Services 2026: Punjab Rates and Registration

Quick answer: PRA sales tax on services is Punjab's provincial sales tax, collected by the Punjab Revenue Authority. The standard rate is 16%, with reduced rates (many now 8%) for listed services. Every person providing taxable services in Punjab must register on the e-PRA portal, for free, and file a monthly return.

If you run an agency, consultancy, salon, restaurant or other service business in Lahore, Faisalabad, Rawalpindi or anywhere else in Punjab, PRA sales tax on services is likely part of your monthly routine. Since the Punjab Finance Act 2026 took effect, several reduced rates have gone up and input tax rules have tightened. This guide covers who must register, current rates, the registration and return process, invoice requirements and a worked example. You can prepare compliant invoices with our free invoice generator, which lets you add tax lines and registration numbers.

Important: This is general information, not tax advice. Figures come from PRA's published FAQs and tax calendar and KPMG's 2026 summary of provincial tax laws. Confirm your category and rate with PRA or a tax practitioner.

What is PRA sales tax on services?

Under Pakistan's constitution, sales tax on goods is federal and handled by FBR, while sales tax on services is provincial. In Punjab, the law is the Punjab Sales Tax on Services Act, 2012, administered by the Punjab Revenue Authority (PRA). Other provinces have their own authorities, including the Sindh Revenue Board; our guide to SRB sales tax on services covers Sindh.

If you sell both goods and services, you may deal with FBR for goods and PRA for services. Our STRN registration guide explains the federal side.

PRA registration: who must register

PRA's own FAQs are direct: every person engaged in providing taxable services is liable to register. There is no general turnover threshold for taxable services, although the government can set one for specific sectors such as hotels. Key points:

• Registration is free. PRA states there is no fee or charge for sales tax registration.
• Any NTN holder can enrol. Location of the head office does not matter.
• FBR-registered persons are not re-registered. They get their existing number with a P prefix.
• New contract rules. After the Punjab Finance Act 2026, PRA can direct licensing bodies and procuring agencies not to issue licences or award contracts unless the person is PRA-registered and on the active taxpayer list, with a six-month grace period for newly established businesses.

How to register with PRA: step by step

1. Get an NTN first. PRA enrolment relies on your federal NTN. If you need one, see how to get an NTN number in Pakistan.
2. Open the e-PRA portal. Go to PRA's e-PRA portal and start a new registration.
3. Enter business details. Provide your legal name, CNIC or company details, business address in Punjab, bank account and contact information.
4. Select your services. Choose the service categories you provide. This drives the rate PRA expects you to charge.
5. Upload supporting documents. PRA's registration manual lists what each type of person needs; have CNIC copies, proof of business premises and, for companies, incorporation documents ready.
6. Submit and verify. Complete verification steps and note your PRA registration number once issued.
7. Start charging tax. From the date your service is taxable, issue tax invoices and file monthly returns.

Before you submit, double-check that the business address and service categories are correct, because they determine which rate PRA expects on your returns. After registration, update your invoice template, quotation format and website terms so every document shows the PRA number and states whether prices include or exclude Punjab sales tax. Telling existing clients in writing avoids disputes when tax first appears on their bills.

Punjab sales tax on services rates for 2026-27

PRA's FAQs give a standard rate of 16% of the value of a service, with telecommunication at 19.5%. Part III of the Second Schedule lists reduced rates, usually without input tax adjustment. KPMG's brief on the Punjab Finance Act 2026 reports these changes:

Service	Before 2026 Act	2026-27
Standard rate (most services)	16%	16%
Telecommunication	19.5%	19.5%
Accountants, auditors, tax and corporate law consultants (qualifying services)	5%, no input tax	8%, no input tax
Architects, town planners, interior designers	5%, no input tax	8%, no input tax
Property dealers and realtors	5%, no input tax	8%, no input tax
Restaurants paid by card, wallet or QR	5%, no input tax	8%, no input tax
Event management (new separate entry)	Part of another entry	8%, no input tax
Foreign exchange dealers and money changers	Exempt	3%, no input tax

Where the conditions for a reduced rate are not met, the 16% standard rate applies. Our sales tax calculator works out tax at any rate, and the guide to reverse sales tax calculation helps if your price already includes tax.

Input tax rules after the Punjab Finance Act 2026

Businesses at the standard rate can usually adjust input tax paid on business purchases. The 2026 Act tightened this in four ways, according to KPMG:

• 80% cap. Input tax adjustment is limited to 80% of output tax for the period (down from 90%), so at least 20% of output tax is paid in cash.
• Capital goods spread. Input tax on machinery and fixed assets is adjusted in twelve equal monthly instalments.
• ATL suppliers only. Input tax is not admissible on invoices from suppliers who are not on the PRA or FBR active taxpayer list.
• Risk-based checks. PRA can defer or disallow claims flagged by its risk system, after giving a hearing.

The active taxpayer definition also changed: a registered person who misses the due date for the two most recent consecutive returns is no longer active. That makes filing on time more important than ever, for you and for your suppliers.

Worked example: a Lahore design studio

A Lahore interior design studio bills a client Rs 400,000 for design services in November 2026. The studio qualifies for the reduced rate, which is now 8% without input tax.

Line	Amount
Design fee	Rs 400,000
Punjab sales tax at 8%	Rs 32,000
Invoice total	Rs 432,000

Under the old 5% rate, tax would have been Rs 20,000, so the client now pays Rs 12,000 more in tax on the same fee. If the studio had quoted a tax-inclusive price of Rs 420,000 before July, the new rate means the fee portion drops to Rs 388,889 (Rs 420,000 divided by 1.08), so check older quotes and contracts before issuing invoices.

Now take a digital marketing agency at the standard rate. Its output tax for the month is Rs 40,000 and it has Rs 38,000 of valid input tax. With the 80% cap, it can adjust at most Rs 32,000 (80% of Rs 40,000), so it pays Rs 8,000 in cash (Rs 40,000 minus Rs 32,000) and carries the remaining Rs 6,000 of input tax forward as the rules allow.

PRA returns and payment deadlines

Registered persons file a monthly return on e-PRA. PRA's tax calendar shows payment by the 15th and filing by the 18th of the following month for most listed categories, with telecom services paying and filing by the 21st. A simple monthly routine:

1. Close your invoice register for the month and check each invoice has the correct rate.
2. Collect purchase invoices and confirm suppliers are on the active taxpayer list.
3. Calculate output tax, admissible input tax and the cash payable.
4. Generate the payment challan and pay by the 15th.
5. File the return by the 18th and save the acknowledgment.

PRA tax invoice requirements

PRA expects registered persons to issue tax invoices and keep proper records. Each invoice should include:

• Supplier name, address and PRA registration number.
• Buyer name, address and registration number if registered.
• A unique serial number and date; our invoice number generator keeps sequences tidy.
• Description of the service, value excluding tax, tax rate and tax amount.
• Total amount payable.

Credit and debit notes must reference the original invoice, as explained in our credit note guide. Some sectors, such as restaurants, must also report through PRA's electronic invoice monitoring system. For the federal version of these rules, see our guide to the sales tax invoice in Pakistan.

Exports and freelancers

PRA states that export of a taxable service is not liable to tax, provided the service is consumed outside Pakistan and paid for in convertible foreign exchange through declared banking channels, subject to conditions. A freelancer in Punjab working only for foreign clients usually has no PRA tax to charge on those invoices, but must check whether registration applies to any local work. Income tax on export proceeds is a separate matter covered in PSEB registration for freelancers.

Mixed local and foreign work

Many Punjab freelancers and agencies serve both foreign and local clients. A common approach is to keep separate invoice series for exports and local work, so the PRA return clearly shows taxable local sales and the export sales that are not taxed. Keep bank credit advices or proceeds realisation documents for each export invoice; they are the evidence that payment arrived in foreign exchange through banking channels. Our guide to invoice numbering systems shows how to run parallel series without gaps.

Which services are taxable in Punjab?

Reporting on the Punjab Finance Act 2025 says Punjab moved to a negative list approach from 1 July 2025, meaning services are broadly taxable unless listed as exempt. In practice, if you sell a service in Punjab and cannot find it in the exempt list, assume it is taxable and check with PRA. Examples that regularly appear in PRA's schedules include advertising, consultancy, IT services sold locally, construction, restaurants, salons, rent-a-car, event management, courier services and property dealing.

Monthly compliance checklist

• Registration active and details current on e-PRA.
• Every invoice shows your PRA number, rate and tax amount.
• Supplier invoices checked against the active taxpayer list before claiming input tax.
• Tax paid by the 15th and return filed by the 18th, or by the current notified dates.
• Records kept for at least the period required by law.

Common PRA mistakes to avoid

• Charging the old 5% rate after 1 July 2026 on services that moved to 8%.
• Claiming input tax on invoices from suppliers who are not on the ATL.
• Filing late twice in a row and losing active taxpayer status.
• Assuming FBR sales tax registration covers services; you still need the PRA side.
• Issuing invoices without a PRA number, which makes it harder for registered clients to claim input tax and may lead them to delay payment.
• Mixing taxable local work and exempt export work on one invoice without separating the lines.

Create PRA-ready invoices

PRA sales tax on services comes down to three habits: register on e-PRA, charge the correct rate (16% or the new 8% reduced rates), and file by the monthly deadlines. Our free invoice generator lets you add your PRA number, a tax line at any rate and a clear service description, then download a PDF. For a clean layout, try the classic invoice template.