Sales Tax on Services by
SRB, PRA, KPRA and BRA
Provincial Taxation System in Pakistan
Provincial Services Tax is collected by SRB, PRA, BRA and KPRA. These are the provincial authorities for collecting sales tax on services in the four provinces whereas the federal capital area of Islamabad is under FBR.
The Pakistani government has undertaken several measures in order to reform the tax system and that is leading in an increased tax revenue. By empowering the central revenue authority (i.e. the FBR) through different laws and regulations, and then utilizing the provincial governments’ resources to manage the tax recoveries in a more effective way. To that effect, the provincial governments are empowered, through an amendment to the Constitution, to levy and collect taxes mandated under a provincial tax regime, excluding ones reserved for the federal government. Amidst this backdrop, issues of conflict and harmonization began to emerge. The focus was on unified rules & definitions, taxing power, distinctions among authorities, respective jurisdictions, tax harmonization, and mechanisms for data sharing.
PRA, SRB, KPRA and BRA
It was conferred and borne out that provinces should have revenue authorities. Subsequently, all four provinces promulgated legislation and regulations to materialize the form, some earlier than others. The authorities that were established are Sindh Revenue Board (SRB), Punjab Revenue Authority (PRA), KP Revenue Authority (KPRA) and Balochistan Revenue Authority (BRA). The authorities were mandated, with varying degrees of authority, to implement government policies, supervise & monitor recovery of Taxes on Services, provide a working mechanism, and collaborate and interoperate with the central authority, i.e. FBR.
Which are the Provincial Taxes on Services
There is a list of taxes, rates, and fees levied by these bodies in their respective acts. Provincial tax regime generally includes and not limited to tax on trade and profession, stamp duty, duty on excises not included in the federal excise duty, electricity duty, entertainment duty, taxes on motor vehicles, tolls on roads and bridges, urban immovable property tax, betterment tax, capital gains tax, taxes on cinemas and hotels, and arms license fees, court fees, cotton fees and various cesses. Local government bodies such as municipalities, districts, and local councils are permitted to collect taxes within their jurisdiction prior to approval by the respective provincial government.
Tax Regime
- Capital Value Tax
- Sales Service Tax:
- Stamp Duty: Stamp duty is imposed on instruments and documents mentioned in the schedule of the Stamp Act, 1899. A stamp duty is a provincial levy applicable to all instruments executed, drawn, or presented in Pakistan, as listed in the said Schedule and at the rates specified against each item.
- Excise Duty:
- Property Tax: There is a provincial tax levied on the value of the property, with the rates varying between provinces
- Professional Tax: Professional tax is a provincial levy on trade, professions, callings, and employment generally payable on the basis of paid-up capital. The rates differ between provinces
- Land Revenue Tax:
- Motor Vehicle Tax:
- Urban Immovable Property Tax (UIPT):
- Agriculture Income Tax (AIT):
- Entertainment Tax:
- Cotton & Tobacco Tax:
- Hotel Tax:
- Electricity Duty
- Miscellaneous others
Punjab Revenue Authority (PRA)
The PRA model was developed on the basis of the internationally recognized doctrine of SARA (Semi-Autonomous Revenue Administration). SARA has generally produced very encouraging results in the developing world. PRA will act as a neutral tax enforcement agency to ensure that the government’s tax share in economic activity is maximized. However, it will endeavor to maintain a balance between tax enforcement and tax facilitation. Punjab Revenue Authority (PRA) has its own mission, vision, and values. It aims to reach and stabilize itself at a level where it can ensure effective revenue mobilization for sustainable development. It is PRA’s mission to develop a modern, responsive, and durable tax management system in order to reach such a visionary height. PRA is wholly committed to the internationally honored values of “professionalism”, “fairness” and “trustworthiness”. PRA is developing an HR policy for the purpose of attracting and retaining the very best technical talent, regardless of where it comes from, to ensure the highest possible ethical standards can be maintained. PRA is not just the name of an organization; it represents a philosophy of change in financial administration.
Sindh Revenue Board (SRB)
The government of Sindh (GoS) announced that sales tax will be imposed, assessed and collected on services pursuant to the 7th NFC award. As a result, the Sindh Revenue Board Act, 2010 was promulgated on Tuesday, the 24th of June 2010 by gazette notification No: PAS/Legis-B-12/2010 after receiving the assent of the Sindh Assembly. As part of the Act, a Board is created for the purposes of managing, supervising and taking appropriate actions to administer sales tax on services. The Board will be led by a Chairman, assisted by not fewer than four members representing Operations, Legal Affairs & Coordination, Support Services, and Audit, respectively. To levy and collect Sindh Sales Tax (SST) on services provided or rendered, the Sindh Sales Tax on Service Act, 2011 (Sindh Act No. XII of 2011) was enacted. SRB was made responsible for administering, collecting and enforcing SST in accordance with this Act as of July 01, 2011. In addition, the Board manages tax policy, taxpayer education, taxpayer facilitation, and taxation.
Khyber-Pakhtunkhwa Revenue Authority (KPRA)
A corporation with the mandate to administer and collect Sales Tax on Services was established under Khyber Pakhtunkhwa Finance Act, 2013. In order to be able to monitor KPRA’s activities, it has been moved to the Finance Department, which has direct access to the Government. It is governed with relative autonomy. It consists of three (03) Cabinet Ministers for Finance, Law, Excise and Taxation, the Chief Secretary, Secretaries of the Ministry of Finance, Law, Excise, Taxation and Narcotics Control, as well as four representatives appointed by the Government from the private sector.
Balochistan Revenue Authority (BRA)
In the pursuit of the 18th Amendment and 7th NFC Award, All provinces of Pakistan were given autonomy in collecting taxes on services. Balochistan Revenue Authority (BRA) came into being for the purpose of collecting taxes on services. BRA was promulgated on Friday, the 3rd of July 2015. A government-nominated Advisory Council, composed of 7 official members and 6 private members, advises the BRA on policy, planning, reform, and budget. Chief Ministers chair the Advisory Council meetings every six months. Although the BRA is responsible for general policy and oversight, it is the commissions that are responsible for registering and deregistering taxpayers, auditing and assessing, and enforcing our sales tax laws. The BRA is dedicated to developing a professional and responsive tax management system possessing the highest possible professional capacity and integrity standards.
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