Last Update 20 July 2026
Sales tax on services in Islamabad is little bit complex. This blog will break-up the sales tax into crunches like standard rate, reduced rate, zero rate and exempted services.
The Islamabad Capital Territory (Tax on Services) Ordinance, 2001 levies sales tax on the services which are rendered or provided in Islamabad capital city, its rural and far-off areas.
In the Islamabad Capital Territory (ICT), the standard rate of sales tax on services is 15%. Just like general sales tax, services are also zero rated, exempted and taxed at reduced rate which is 5%.
Table of Contents
- Download Our PDF Guide on ICT Sales Tax on Services
- Standard Rates of Sales Tax on Services in Islamabad
- Services exempted from Sales Tax in Islamabad
- Reduced Rates of Sales Tax on Services in Islamabad
- Zero-Rated Services in Islamabad
- Option of Reduced Rates
- Bonus Section
- Disclaimer
- Sources and References
- Frequently Asked Questions
One thing to remember that businesses can’t claim any input tax credit against reduce rated and zero-rated services.
In the coming lines, we are mentioning rates of sales tax on services which are applicable for the tax year 2026-27 (from 1st July 2026 to 30 June 2027).
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Standard Rates of Sales Tax on Services in Islamabad
Table‑1 of the ICT Sales Tax on Services Ordinance 2001 specifies services which are taxed at standard rates.
| Sr. No as per Table 1 | Services and Service Providers | PCT Headings (HS codes) | Sales Tax |
| 1(i) | Hotels, motels, guest houses, farmhouses, marriage halls, lawns, clubs and caterers | 98.01 series | Tax will be 5% if customer pays via credit or debit card, mobile wallet or QR code. Otherwise, sales tax will be 15% if customer pays bill in cash. |
| 1(ii) | Restaurants including cafes, food and ice-cream parlors, coffee house, coffee shops, deras, food huts, eateries, resorts and similar cooked, prepared or ready-to-eat food service outlets etc. | 98.01 series | Same as above in 1(i) |
| 2 | Advertisements on TV and radio excluding exempted one(s). | 9802.1000 and 9802.2000 | 15% |
| 3 | Services provided by stevedores, customs agents and ship chandlers | 9805.2000, 9805.4000 and 9805.8000 | 15% |
| 4 | Courier and cargo services provided by the courier companies via road | 9808.0000 9804.9000 | 15% |
| 5 | Construction services excluding the exempted one(s). | 9824.0000 and 9814.2000 | 15% |
| 6 | Services provided by the property developers and promoters (including the allied services). For the purpose of calculation of sales tax on services, the actual purchase value or documented cost of land will not be considered. Let’s assume, cost of a house construction is Rs.7 million and plot costed Rs.10 million. The contractor will charge sales tax on the basis of Rs. 7 million. | 9807.0000 and 98.14 series | Rs.100/sq. yard for land development and Rs.50/sq. ft for building construction |
| 7 | Provision of services or execution of word under a contract excluding the exempted one(s). | 9809.0000 | 15% |
| 8 | Personal care services rendered by beauty parlours, salons, slimming clinics, pedicure centres and body massage centres. Personal care services also include plastic and cosmetic surgery. Standard rate (15%) will be applied if these businesses: i. Have annual revenue exceeding Rs. 3.6 million or ii. Are operating in air-conditioning facility (AC is installed or it is available at the premises). | 9810.0000 9821.4000 and 9821.5000 | 15% |
| 9 | Management consultancy services | 9815.4000, 9819.9300 | 15% |
| 10 | Freight forwarding agents, packers and movers | 9805.3000, 9819.1400 | 15% |
| 11 | IT and IT-enabled services IT services cover software development, software maintenance, system integration, web design, web development, web hosting and network design. IT enabled services cover inbound or outbound call centres, medical transcription, remote monitoring, graphics design, accounting services, human resources (HR) services, telemedicine centres, data entry operations, cloud computing services, data storage services, locally produced television programs and insurance claims processing. | Respective headings | 15% |
| 12 | Technical, scientific and engineering consultants | 9815.9000 | 15% |
| 13 | Services provided by other consultants (other than those mentioned in serial no.12 above) including HR, market research and credit rating services | 9815.9000 9818.3000 9818.2000 | 15% |
| 14 | Tour operators and travel agents (other than Hajj / Umrah services) | 9805.5100 9805.5000 9803.9000 | 15% |
| 15 | Manpower recruitment and labour supply agents | 9805.6000 | 15% |
| 16 | Security agencies | 9818.1000 | 15% |
| 17 | Advertising agents | 9805.7000 | 15% |
| 18 | Services provided by share transfer and depository agents. These services also include recording and maintenance of securities; and registration of transfer of shares, securities and derivatives. | 9805.9000 | 15% |
| 19 | Business support services | 9805.9200 | 15% |
| 20 | Fashion designers (textile, leather, jewellery, dress etc.) Serial 20 covers all the allied services like marketing, packing, delivery and display, etc. | 9819.6000 | 15% |
| 21 | Architects, town planners and interior decorators | 9814.1000 9814.9000 | 15% |
| 22 | Rent-a-car services | 9819.3000 | 15% |
| 23 | Specialized workshops (such as auto, machinery, industrial design, construction machinery, household electronics, computer hardware, etc.), services stations, car wash and other workshops | 98.20 series | 15% |
| 24 | Fumigation, maintenance (building and equipment both), cleaning, janitorial, dredging or de-silting services and other similar services. | 98.22 series | 15% |
| 25 | Underwriters, commission agents, indenters, brokers (other than stock) and auctioneers. | 9819.1100, 9819.1200, 9819.1300 and 9819.9100 | 15% |
| 26 | Laboratories (other than pathological / diagnostic labs) | 98.17 series | 15% |
| 27 | Health clubs, gyms, physical fitness centres, indoor sports, game centers and sauna / body massage centres. | 9821.1000 9821.2000 9821.4000 | 15% |
| 28 | Laundries and dry cleaners | 9811.0000 | 15% |
| 29 | Cable TV operators | 9819.9000 | 15% |
| 30 | Technical analysis and testing services | 9819.9400 | 15% |
| 31 | TV / radio program producers and production houses | – | 15% |
| 32 | Pipeline and conduit transportation | – | 15% |
| 33 | Fund and asset management services | – | 15% |
| 34 | Inland ports, air ports, dry ports and terminal operators including public warehouses. | – | 15% |
| 35 | Technical inspection, certification and quality control services. | – | 15% |
| 36 | Erection, commissioning and installation services | – | 15% |
| 37 | Event management services | – | 15% |
| 38 | Valuation, competency and eligibility testing services excluding education testing services provided or rendered under a bilateral or multilateral agreement signed by the Government of Pakistan | – | 15% |
| 39 | Exhibition and convention services | – | 15% |
| 40 | Mining of minerals, oil and gas services | – | 15% |
| 41 | Property dealers and realtors | – | 15% |
| 42 | Call centres | – | 15% |
| 43 | Car and automobile dealers | – | 15% |
| 44 | Advertisement on billboards, signboards, websites and internet. | 9802.9000 | 15% |
| 45 | Landscape designers | 9814.4000 | 15% |
| 46 | Sponsorship services | 9805.9100 | 15% |
| 47 | Legal practitioners and consultants | 9815.2000 | 15% |
| 48 | Accountants and auditors | 9815.3000 | 15% |
| 49 | Stockbrokers including future brokers and commodity brokers, money exchangers, videographers, photographers, surveyors, art painters, auctioneers and registrar to an issue. | 9819.1000, 9819.2000, 9819.5000, 9819.7000, 9819.8000, 9819.9100, 9819.9500 and 9819.9090 | 15% |
| 50 | Race clubs (entry, admission and other services) | – | 15% |
| 51 | Corporate law consultants | 9815.9000 | 15% |
| 52 | Visa processing and migration consultancy | – | 15% |
| 53 | Debt collection and recovery services | – | 15% |
| 54 | Supply chain and distribution services | – | 15% |
| 55 | Inter‑city transportation or carriage of goods | – | 15% |
| 56 | Ready‑mix concrete services | – | 15% |
| 57 | Public relations services | – | 15% |
| 58 | Training and coaching (other than education) | – | 15% |
| 59 | Cleaning, janitorial, waste collection and processing | 9822.2000, 9822.3000 and 9822.9000 | 15% |
| 60 | Electric power transmission services | – | 15% |
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Services exempted from Sales Tax in Islamabad
Table‑1 also covers exempted services.
| Sr. No as per Table 1 | Services and Service Providers | PCT Headings (HS codes) |
| 2 | Advertisements on TV and radio which are sponsored by: 1. The Federal or Provincial Government for health education; 2. The Population Welfare Division relating to educational promotion campaign; 3. The Government funds under the grant-in-aid agreement; and 4. The World-Wide Fund for Nature (WWF) or United Nations Children’s Fund (UNICEF) for conveying public service messages. | 9802.1000, 9802.2000 |
| 5 | Construction projects where: 1. Cost (excluding actual and documented cost of land) of industrial and commercial projects does not exceed Rs.50 million per annum; 2. Tax is already paid Under “Property Developer or Promoter” Regime; 3. Government (including cantonment boards) executes civil work; 4. International tenders execute projects under the foreign funds; 5. Industrial zones and consular buildings are constructed; 6. Income-tax exempted organizations execute construction; and 7. Covered area does not exceed 10,000 square feet for houses and 20,000 square feet for apartments (residential projects). | 9824.0000 and 9814.2000 |
| 7 | Execution of contract where: 1. Annual total value of the contractual work or supplies does not exceed Rs. 50 million; and 2. It involves printing or supplies of books. | Respective headings |
| 14 | Hajj and Umrah Services | Respective headings |
| 58 | Educational services Schools, colleges, academies, institutes and universities (operating in Islamabad Capital Territory) can’t charge sales tax. | Respective headings |
Reduced Rates of Sales Tax on Services in Islamabad
Table‑2 of the ICT Sales Tax Ordinance 2001 includes services that are taxed at reduced rates and zero rates.
| Sr. No as per Table 2 | Services and Service Providers | PCT Headings (HS codes) | Sales Tax |
| 2 | Personal care services rendered by beauty parlours, salons, slimming clinics and plastic surgery services, body massage centers and these businesses: Have annual revenue less than Rs. 3.6 million; or Are not operating in air-conditioning facility (AC is not installed or it is not available). | 9810.0000, 9821.4000 and 9821.5000 | 5% |
| 3 | Freight forwarding agents, packers and movers | 9805.3000 and 9819.1400 | 5% or Rs.1000 per bill of lading whichever is higher |
| 4 | Tour operators and travel agents (other than Hajj / Umrah services) | 9803.9000, 9805.5000 and 9805.5100 | 5% |
| 5 | Specialized workshops (auto, machinery, electronics, computer hardware etc.) | 98.20 series | 5% |
| 6 | Health clubs, gyms, indoor sports, sauna, game centers | 9821.1000 9821.2000 9821.4000 | 5% |
| 7 | Laundries and dry cleaners | 9811.0000 | 5% |
| 9 | Car / automobile dealers | – | 5% |
| 10 | Marriage halls, lawns, pandal, shamiana services and caterers | – | 5% |
| 11 | Software / IT‑based system development consultants | 9815.6000 | 5% |
Zero-Rated Services in Islamabad
Below are zero-rated services:
| Sr. No as per Table 2 | Services and Service Providers | PCT Headings (HS codes) |
| 1 | Construction projects including those executed by international tenders under the foreign funds. | 9814.2000 and 9824.0000 |
| 8 | Services provided by property dealers and realtors. | Respective headings |
| 12 | Services provided by property developers and promoters (including allied services) relating to low-cost housing schemes sponsored or approved by Naya Pakistan Housing and Development Authority or under Government’s Ehsaas programme. | 9807.0000 and respective sub-headings of 98.14 |
Option of Reduced Rates
Following businesses can opt reduced rate of 5%. If they opt it, they will not enjoy the facility of claiming input tax credit. It means that businesses cannot claim sales tax which they have paid for rendering their services.
- Tour operators and travel agents
- Freight forwarding agents, packers and movers
- Specialized workshops like auto, machinery, electronics, computer hardware etc.
- Health clubs, gyms, indoor sports, sauna, and game centers
- Laundries and dry cleaners
- Car and automobile dealers
- Marriage halls and lawns, pandal, shamiana service providers and caterers
- Software houses and IT based system development consultants
Bonus Section
Do you know! The Government of Punjab has its own authority to collect sales tax on services. Just like this blog, we have also cover taxation of services in the Province of Punjab in another post. The sales rates in Punjab are:
- Fixed rates for property developers and freight forwarding agents
- Standard rate – 16%
- Higher than standard rate – 19.5% (Telecommunication services)
- Lower than standard rate – 15% (Carriage of goods by rail or road)
- Reduced rate – 3%, 5% and 8%.
- Some services are zero rated and others are tax free.
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Disclaimer
This blog is for general information only. Its content is based on the ICT (Tax on Services) Ordinance 2001 (updated for FY 2026–27). Tax laws change from time to time, and the rules apply differently due to specific circumstances for each individual.
This content should not be treated as professional tax advice. For specific guidance, please consult a qualified tax professional or refer to the latest notifications issued by the Federal Board of Revenue.
Sources and References
Following are the references of the above-mentioned rates of sales tax.
- The Islamabad Capital Territory (tax on services) Ordinance 2001 updated up to 30th June 2026.
- SROs, circulars and notifications issued by the Federal Board of Revenue.
- The Federal Finance Act 2026
Frequently Asked Questions
What is the ICT sales tax rate on services in Islamabad?
Which services are subject to ICT sales tax?
ICT sales tax applies to various services including accounting and auditing, consultancy, IT and IT-enabled services, legal services, advertising, training and coaching, business support services, security services, and many other taxable services listed in the ICT (Tax on Services) Ordinance, 2001
What is the ICT sales tax rate on accounting and bookkeeping services?
What is the ICT sales tax rate on consultancy services?
Is export of services taxable in Islamabad?
Export of services is zero-rated under the ICT (Tax on Services) Ordinance, 2001. A zero-rated service is taxable at 0%, subject to fulfillment of the prescribed legal conditions.
What is the ICT sales tax rate on IT services?
IT services and IT-enabled services are generally taxable at 15% under Table-1 of the Ordinance. This includes services such as software development, web development, web hosting, graphic design, data processing, cloud computing, accounting services, and other IT-enabled activities. These services will be zero rated if they are exported.
Can software houses opt for the 5% ICT sales tax regime?
Are freelancers liable for ICT sales tax?
Freelancers provide services to foreign clients and overseas businesses. And there is no sales tax on export of services. So, freelancers are not liable for ICT sales tax.
Which services are taxed at 5% under ICT sales tax?
Certain services enjoy a reduced tax rate of 5%, including software or IT-based system development consultants, tour operators, travel agents, laundries, dry cleaners, health clubs, gyms, freight forwarding agents, packers and movers, and specified specialized workshops, subject to prescribed conditions.
Which services are zero-rated under ICT sales tax?
Can input tax be claimed on services taxed at 5% under ICT Sales Tax Ordinance 2001?
Who collects sales tax on services in Islamabad?
What is the difference between ICT and Punjab sales tax on services?
Federal Board of Revenue (FBR) levies and collects sales tax on services in Islamabad Capital under the ICT (Tax on Services) Ordinance, 2001, whereas Punjab sales tax on services is administered by the Punjab Revenue Authority (PRA) under Punjab Sales Tax on Services Act 2012. Tax rates, exemptions, and compliance requirements differ between the two jurisdictions.
Do consultants need to register for ICT sales tax?
Are training and coaching services subject to ICT sales tax?
Training and coaching services other than educational services are generally taxable at 15% under the ICT (Tax on Services) Ordinance, 2001.
