Punjab Sales Tax on Services Act, 2012 (the Act) governs the Sales tax on services which are rendered in the province of Punjab. The Punjab Revenue Authority (PRA) levies and collects sales tax on such services.
This blog will break down the sales tax rates into simple chunks like standard rate, reduced rate, fixed tax, zero-rated and exempted services. At end of the blog, taxation of advertisement services, telecom services and construction projects relating to government civil works have been explained separately.
Table of Contents
- Standard Rate of Sales Tax on Services in Punjab 2025-26
- Fixed Tax Services (Part II of Second Schedule)
- Reduced Rate Services (Part III of Second Schedule)
- Zero-Rated Services
- Tax free services – Exempted Services
- Exemption by Federal Board of Revenue (FBR)
- Advertisement Services
- Telecommunication services
- Government civil works – Concessional rates
- Double taxation on construction projects
- Disclaimer
- References
In Punjab, the standard rate of sales tax on services is 16% unless the Act specifies different rates. Reduced rate of the sales tax is 5%. Telecommunication services are taxed at 19.5%, and carriage of goods by rail or road is taxed at 15%. Taxpayers cannot clam input tax credit against reduced-rate and zero-rated services.
In the coming sections of this blog, I am outlining the applicable rates of Punjab Sales Tax for the tax year 2025–26.
Standard Rate of Sales Tax on Services in Punjab 2025-26
Below is the detailed list of standard rates of Punjab sales tax on services
| Sr. No | Services and Service Providers | PCT Headings (HS Codes) | Sales Tax on Services |
| 1 | Hotels, motels and guest houses (corporate, franchisee, part of or operating chain businesses, they have 20 or more rooms) | 9801.1000 | 16% |
| 2 | Restaurants including cafes, food (including ice-cream) parlors, coffee houses, coffee shops, deras, food huts, eateries, resorts and similar cooked, prepared or ready-to- eat food service outlets etc. | 98.01 series | 16% The sales tax will be 5% (without input tax adjustment) if customer pays via credit or debit cards, mobile wallets (Easypaisa, JazzCash, SadaPay, Naya Pay etc.) or by scanning the QR codes. |
| 3 | Rent-a-car services (including renting of all categories of vehicles for the transportation of persons) provided to customers other than end consumers. | 9819.3000 | 16% |
| 4 | Authorized car and automobile dealers including car companies | 9806.3000 9845.0000 | 16% |
| 5 | Brokerage (other than stock) and indenting services including agents, brokers, under-writers and auctioneers | 9829.0000 9819.1200 9819.1100 9819.1300 9819.9100 | 16% |
| 6 | Actuaries, liquidators, receivers, auctioneers and practicing company secretaries | Respective headings | 16% whereas corporate law consultancy services are taxed at 5%. |
| 7 | Telecommunication services (There is a long list of such services which fall under this category. A separate section of this blog is covering telecom services) | 98.12 series | 19.5% |
| 8 | Carriage of goods by rail or road | 98.04 series | 15% with input tax adjustment for service provider and service recipient |
| 9 | Construction services and projects excluding government civil works and tax- free projects. | 9814.2000, 9824.0000 | 16% and government civil works are taxed at 5%. |
| 10 | Property developers and promoters (standard regime) | 9807.0000 | 16% |
| 11 | Management consultancy services | 9815.4000 | 16% |
| 12 | Technical, scientific and engineering consultants | 9815.9000 | 16% |
| 13 | Advertising agents (with some exclusions mentioned in the separate section of this blog) | 9805.7000 | 16% |
| 14 | Insurance services other than individual health insurance. Punjab sales tax act also specifies these standard rate insurances: fire, goods, health (other than individual), life, marine and theft. | 98.13 series | 16% |
| 15 | HR, training and personnel development services | Respective headings | 16% |
| 16 | Exhibition and convention services | Respective headings | 16% |
| 17 | Event management services | Respective headings | 16% |
| 18 | Valuation & evaluation services | Respective headings | 16% |
| 19 | Certification, verification & equivalence services | Respective headings | 16% |
| 20 | Market research or sales and marketing services | Respective headings | 16% |
| 21 | On‑line marketing and marketing agencies | Respective headings | 16% |
| 22 | Surveying services | Respective headings | 16% |
| 23 | General training or coaching (other than relating to Information Technology) | Respective headings | 16% |
| 24 | Credit rating agencies | Respective headings | 16% |
| 25 | Franchise services including intellectual property rights and licensing other than: Relating to educational institutions for information technology (sales tax: 0%)Relating to all other educational institutions (sales tax: 5%) | Respective headings | 16% |
Fixed Tax Services (Part II of Second Schedule)
The services listed in below table are taxed at fixed rate.
| Sr. No. | Services and Service Providers | PCT Headings (HS Codes) | Rate of Sales Tax on Services |
| 1 | Services provided by property developers, builders, and promoters (including their allied services) | 9807.0000 and respective sub-headings of 98.14 | Rs.100 per sq. yard for land development; Rs.50 per sq. ft for building construction |
| 2 | Freight forwarding agents | 9805.3000 | Rs.1,000 per bill of lading |
Reduced Rate Services (Part III of Second Schedule)
Adjustment of input tax against reduced rate services is not available.
| Sr. No | Services and Service Providers | PCT Headings (HS C kodes) | Rate of Sales Tax on Services |
| 1 | Hotels, motels, guest houses (non-corporate, non-franchise, not a part of chain businesses, and they have less than 20 rooms) | 9801.1000 | 5% |
| 2 | Marriage halls, lawns, marquees, shamiana and catering services which also include flower supplies, decoration; and rental of marriage halls (space), sound systems and furniture; and other ancillary / allied services. | 9801.3000 and 9801.5000 | 5% |
| 3 | Restaurants including cafes, food (including ice-cream) parlors, coffee houses, coffee shops, deras, food huts, eateries, resorts and similar cooked, prepared or ready-to- eat food service outlets etc. | 9801.2000 and 9801.9000 | 5% if customer pays via credit or debit cards, mobile wallets (Easypaisa, JazzCash, SadaPay, Naya Pay etc.) or by scanning the QR codes. |
| 4 | Franchise services including intellectual property rights and licensing | 9823.0000 9839.0000 and respective headings | 5% for services relating to educational institutions other than those for information technology |
| 5 | Beauty parlors, salons, spas, slimming clinics, saunas, Turkish baths, Jacuzzi and other similar businesses. It also covers personal care services. | 9810.0000 9848.0000 9847.0000 9821.4000 9821.5000 9815.7000 | 5% |
| 6 | Specific services like health care, gym, physical fitness, indoor sports, games, amusement parks, arcades and other recreation facilities, and body or sauna massage etc. | 9821.1000 9821.2000 9821.4000 | 5% |
| 7 | Services provided by Laundries and dry cleaners | 9811.0000 | 5% |
| 8 | Services provided by Cable TV operators | 9819.9000 | 5% |
| 9 | Services in relation to supply of tangible goods including machinery, equipment and appliances for use, without transferring right of possession and effective control of such machinery, equipment and appliances. | Respective headings | 5% |
| 10 | Accountancy, audit, tax and corporate law consultancy services | Respective headings | 5% |
| 11 | Domestic and international air travel | 9803.1000 9803.1100 | 5% |
| 12 | Skin and laser clinics, cosmetic and plastic surgeons including hair transplant services and consultation services. | Respective headings | 5% |
| 13 | Warehouses, depots and cold storages including the spaces for cold storages | 9833.0000 | 5% |
| 14 | Photo studios, photographers and film makers | 9817.7000 | 5% |
| 15 | Parking services | Respective headings | 5% |
| 16 | Dress designing and stitching | Respective headings | 5% |
| 17 | Rental of bulldozers, cranes, construction equipment, generators, storage containers, refrigerators including shelf and rack renting | Respective headings | 5% |
| 18 | Scaffolding and shuttering services | Respective headings | 5% |
| 19 | Textile treatment services including dyeing, edging, cutting, cloth treating, water proofing, embroidery, engraving, fabric bleaching, knitting, leather staining, leather working, preshrinking, colour separation, pattern printing and shoe making services | Respective headings | 5% |
| 20 | Apartment house management, real estate management and collection of rent services | Respective headings | 5% |
| 21 | Ride hailing services | Respective headings | 5% |
| 22 | IT enabled services such as: Software maintenance & support, System operation or system administration, Web design, Web development, Web hosting Network design Data warehousing, data migration, Data processing Cybersecurity & system protection, ERP & related services, Development & sale of smartphone apps or games, Graphics designing, Medical transcription, Telemedicine & remote monitoring, Insurance claim processing Online retrieval and database access services | Respective headings | 5% however IT and software-based development services are zero rated. |
| 23 | Services provided by tour operators and travel agents including all their allied services or facilities. | 9805.5100 9805.5000 9803.9000. | 5% |
| 24 | Manpower recruitment agents, including labour and manpower supplies. And these services are fixed by the Bureau of Emigration and Overseas Employment | 9805.6000 | 5% |
| 25 | Property Dealers and Realtors | 9806.2000 9844.0000 | 5% |
| 26 | Architects, town planners, landscapers, landscape designers, interior decorators and interior designers. | 9814.1000, 9814.9000, 9814.4000 | 5% |
| 27 | Rent-a-car services (including renting of all categories of vehicles for the transportation of persons) provided to end consumers | 9819.3000 | 5% |
| 28 | Unauthorized car and automobile dealers | 9806.3000 9845.0000 | 5% |
| 29 | Agricultural produce and home chefs | Respective headings | 5% |
| 30 | Insurance agents and insurance brokers | 98.13 | 5% |
| 31 | Construction projects relating to government civil works | Respective headings | 5% |
Zero-Rated Services
Punjab Sales Tax on Services Act 2012 outlines following services for which sales tax is zero.
- Individual health insurance
- Selling of franchises including intellectual property rights by educational institutions of information technology
- Services provided by software or IT-based system development persons
- Training services relating to information technology for example software development, web designing, digital skills etc.
- Bed room charges of hospitals exceeding Rs. 6,000 per day
- Medical consultation or visit fee exceeding Rs.1,500 per visit or consultation
- Entertainment services including cinemas, theatres, concerts, circus, sports events, races, films, stage shows and fashion shows.
- Software and IT-based system development such as:
- Software development
- Software customization
- System development
- System design & architecture
- System up‑gradation or modification
- Development of IT‑based systems
Tax free services – Exempted Services
The section 3A and First Schedule of the Punjab sales tax act specifies tax free services.
Government offered services – tax free
Services offered by the Government (Federal, Provincial and Local) are exempted from sales tax.
- Healthcare services. The services include doctor consultation and visit fees and bed or room charges in public sector hospitals.
- Education service (which are offered in public sector educational institutions).
- Public transport service
- Registration services including passport and identity cards services.
- Postal and courier services provided to the Government.
- Services relating to religion, art, culture and sports
- Services relating to physical fitness, entertainment, amusement and learning like gymnasiums, sport clubs, playgrounds, zoological and botanical gardens, museums, libraries, parks, etc.
Construction projects – tax free
Below mentioned construction projects are tax free:
- Government sponsored housing projects
- Construction of houses in the notified areas under the approved Affordable Private Housing Scheme
- Construction projects sponsored under the foreign grants
- Construction of consular buildings
- Construction of residential buildings where covered area 10,000 square feet for a house and 20,000 square feet for an apartment. But if contractor is building more than one house or an apartment building, then this exemption will not be applied.
Other services – tax free
In addition to the government offered services, following activities, services and service providers are also exempt in Punjab.
- Skin care services, laser treatments, cosmetic treatment, hair transplant, plastic surgery and consultation provided to acid and burn victims.
- General education services (schools, colleges, universities). Professional training and education are taxable.
- Crop insurance
- Marine insurance for the export purposes
- Renting of personal residential properties for residential purpose
- Services provided by diplomatic missions
- Tour operators and travel agents only to the extent of Hajj/Umrah (including Ziyarat)
- Air travel of diplomats and supernumerary crew
- Storage of agricultural produce for the personal use
- Parlours, salons, sliming spas and beauty clinics where the facility of air- conditioning is not installed or is not available in the premises on any day of the financial year
- Individual photographers operating from small road side shops (declared by PRA)
- Contractual execution of works or finished goods only to the extent of services related to the contracts involving supplies or printing of books
- Foreign exchange dealers, money changers and money exchangers
- Advertisement including classified ads in newspapers, magazines, journals and periodicals
- Pathological or diagnostic tests exclusively for medical treatment purposes.
- Toll manufacturing, job processing, conversion charges, industrial packaging, commercial packaging, outsourced industrial and commercial processing.
- Only the government fees charged by ports, airports, dry ports, and bonded warehouses are tax‑free.
Exemption by Federal Board of Revenue (FBR)
Under the Income Tax Ordinance 2001, FBR exempts religious organizations, charities, NGOs, welfare organizations and international agencies from the levy of income tax. So, Punjab Revenue Authority also exempts these organizations from services sales tax with subject to these conditions:
- Religious and charities are working for public benefit.
- International NGOs are approved by the Federal Government.
Advertisement Services
In Punjab, certain advertisement services are not taxable under the First Schedule of the Punjab Sales Tax on Services Act.
Print media advertisements including classified ads in newspapers, magazines, journals, and periodicals are fully exempt unconditionally.
However, electronic media advertisements are exempt if they are sponsored by:
- The Federal or Provincial Government for health education only;
- The Government funds under the grant-in-aid agreements and arrangements; and
- The World-Wide Fund for Nature (WWF) or United Nations Children’s Fund (UNICEF) for conveying public service messages.
Apart from above mentioned exemptions, all other commercial advertisement services are taxable in Punjab at standard rate.
Telecommunication services
The telecommunication services are heavily taxed in Punjab at fixed rate of 19.5%. Punjab does not offer any sales tax exemption to telecom sector.
This category covers everything of your phone like calls, internet, texting, tracking; and also, your internet whether it is wireless or landline or satellite. In addition to it, tracking, paging and security services fall under this category.
Let’s see a breakdown of telecom services in below table.
| Sr. No. | Category of telecom services (Taxable) | Services |
| 1 | Voice and calling | Landline connections (fixed line),Wireless telephones, Mobile phones, Wireless local loop (WLL), Video telephone services, Payphone cards, Prepaid calling cards and Voice mails |
| 2 | Messaging and texting | SMS (Short Message Service), MMS (Multimedia Message Service) and any other texting service |
| 3 | Internet, data and broadband | Internet services via: Dial-up, Broadband, Email, Data communication network services (DCNS) and Value added services Bandwidth and connectivity services via: Copper lines, Fiber-optic lines, Co-axial cables, Microwave links and Satellite links |
| 4 | Traditional telecom services | Telegraph, Telex, Telefax, Store and forward fax, Audio text and tele-text services |
| 5 | Paging, tracking and security services | Trunk radio services, Paging, voice paging and radio paging, Vehicle tracking services Burglar and security alarm services |
International bandwidth and leased line charges
While Sindh (Sindh Revenue Board) provides an exemption for international bandwidth and leased line charges used by software exporting firms, Punjab does not offer this exemption.
The Second Schedule of the Punjab sales tax act 2012 lists all telecom services under Tariff Heading 98.12 as taxable at 19.5%, with no special relief for software exporters or PTA‑licensed internet service providers.
Government civil works – Concessional rates
In Punjab, government civil works are normally taxed at 5% without input tax adjustment, but the sales tax law also keeps two special legacy rates of 1% and 0% for older public sector projects where budgets and financing were locked during and before the financial year 2016-17.
These concessional rates apply only to long‑running development schemes. They simply protect legacy public projects from tax changes.
Civil Work started during financial year 2016-17
The 1% rate applies to government and cantonment board civil works launched during FY 2016–17, as well as projects funded through foreign loans finalized after 1 July 2016, and PSDP projects falling in the same category.
Civil Work started before financial year 2016-17
The 0% rate is reserved for even older schemes which were initiated before FY 2016–17, or those funded through foreign loans negotiated on or before 1 July 2016, including older PSDP and cantonment board projects.
Double taxation on construction projects
If a registered builder or developer is already paying sales tax on the construction project, the contractor working for them will not need to pay sales tax again.
If the person receiving the construction service is already paying the sales tax in their capacity as a developer or builder, the contractor again will not pay sales tax.
Disclaimer
This blog is for general information only. Its content is based on the Punjab Sales Tax on Services Act, 2012 (updated for FY 2025–26). Tax laws change from time to time, and the applicability of a rule may vary depending on individual circumstances.
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 Punjab Revenue Authority.
References
- Punjab Sales Tax on Services Act, 2012 (updated up to Finance Act 2025).
- Notifications and circulars issued by Punjab Revenue Authority.
