Last reviewed: 7 October 2026. General information, not tax advice. Rates are set per service heading and change through Finance Acts; confirm the rate for your exact service with your tax advisor before you bill.
If you provide services in Islamabad, the sales tax on them is not collected by a provincial revenue authority, as it is in Lahore or Karachi. It is collected by FBR under the Islamabad Capital Territory (Tax on Services) Ordinance 2001. This guide explains the rates, the common exclusions, and how to show the tax on your invoices. If you are already registered and want to know about FBR Digital Invoicing, read our companion guide on Digital Invoicing for Islamabad services businesses.
The legal basis in one paragraph
Section 3(1) of the Ordinance charges sales tax "at rates specified in column (4) of Table-1" on the value of taxable services "rendered or provided in the Islamabad Capital Territory", with Table-2 services taxed at the rates and conditions set out there. Words not defined in the Ordinance take their meaning from the Sales Tax Act 1990, and section 3(3) applies the Act's rules on payment, registration, record-keeping, enforcement, penalties and "all other allied and ancillary matters" to ICT services (FBR consolidated text, as amended to 30 June 2025).
The rates: 15%, not 16%
For most services in Table-1, the rate is 15%. You will still see 16% quoted on blogs and in older news, for example a 2021 report that FBR had directed its Islamabad office to charge 16% on 59 services (ProPakistani, December 2021). The consolidated text explains the change: its footnote says the rates were "Substituted for the words 'sixteen percent' and 'seventeen percent' through Finance Act, 2022". So 16% was the rate before July 2022.
We have not found any change to the ICT services rates in the Finance Act 2026. Because rates can change in any budget, check the current text for your heading before you set up your price list.
| Service (examples from Table-1) | Rate in the consolidated text |
|---|---|
| Management consultancy | 15% |
| IT services and IT-enabled services (software, web design, call centres, data entry and more) | 15% |
| Technical, scientific and engineering consultants; other consultants | 15% |
| Advertising on television and radio | 15% |
| Courier and cargo services by road | 15% |
| Construction services (with exclusions, see below) | 15% |
| Beauty parlours, clinics and similar personal care (with exclusions) | 15% |
| Restaurants, cafes and eateries | 5% if paid by card, mobile wallet or QR (no input tax adjustment); 15% if paid in cash |
| Property developers and promoters | Fixed: Rs 100 per square yard for land development, Rs 50 per square foot for building construction |
The changes that took effect on 1 July 2025 (the card-payment rate for restaurants, the construction and personal care exclusions) were reported at the time by Zameen News.
Common exclusions
Several entries exclude smaller or specific cases. Two that affect many small businesses:
- Construction services exclude, among others, industrial and commercial projects worth no more than Rs 50 million a year (excluding land), government civil works including Cantonment Boards, work under international tenders against foreign grants, and residential projects up to 10,000 square feet for houses or 20,000 square feet for apartments.
- Beauty parlours and clinics are excluded if annual turnover does not exceed Rs 3.6 million, or if the premises have no air-conditioning.
Section 3(4), added by the Finance Act 2025, also lets the Board publish a negative list of exempt services in Table-3. Check whether your service appears there.
Exports of services are zero-rated
Section 3(1A) says the export of services "shall be charged at the rate of zero per cent". If you are an Islamabad software house or consultant billing a foreign client, a registered business shows the service at 0%, not 15%. What counts as an export (where the client is, how payment arrives) is worth confirming with your advisor, especially for mixed local and foreign work. If you are not registered for sales tax at all, you simply issue a normal invoice; our guide on invoicing international clients covers currency and payment details.
What your invoice must show
Because the Sales Tax Act's ancillary provisions apply, an ICT services invoice from a registered provider should carry the same core particulars as a sales tax invoice under section 23: your name, address and registration number; the buyer's name, address and registration number; the date; a description of the service; the value excluding tax; the rate and amount of sales tax; and the total. Since STGO 05 of 2026, registered ICT service providers must also post invoices through FBR Digital Invoicing, so the invoice carries an FBR invoice number and QR code. The full field list is in our sales tax invoice format guide.
TAX INVOICE Date: 2026-11-18 FBR Invoice No: [returned by FBR] [QR] [DI logo] Seller: Example Advisory, F-7 Markaz, Islamabad. NTN 1234567 Buyer: Client (Pvt) Ltd, Blue Area, Islamabad. NTN 7654321 Management consultancy, November 2026 (PCT 9815.4000) Value excluding sales tax: 100,000 ICT sales tax @ 15%: 15,000 Total: 115,000
Billing government and large buyers
Ministries, departments and many large companies are withholding agents. Under the withholding rules they may deduct part of the sales tax shown on your invoice and pay it to FBR directly; one-fifth is commonly quoted for certain cases, but it depends on the buyer and your category. Show the full sales tax on the invoice and reconcile what you receive against the withholding certificate. Income tax withholding on your fee is a separate deduction.
Islamabad or a province?
If you are based in Islamabad but serve clients in Punjab or elsewhere (or the reverse), which law taxes the service depends on where it is treated as provided under each law's rules. Getting this wrong can mean paying in the wrong place, or in two places. This is one of the questions to settle with your advisor when you register, not after your first audit notice.
What is still unclear
- Whether any entry has been changed by notification after June 2025. The consolidated text we used is as amended to 30 June 2025.
- How partial withholding by government buyers is reported in FBR Digital Invoicing.
- Where the line falls for some services that could fit two headings (for example IT-enabled services versus other consultants). The rate is the same 15% for most of them, but the heading on your invoice should be consistent.
Next step
If you are an Islamabad service provider registered for ICT sales tax and not yet posting invoices to FBR, our FBR Digital Invoicing setup service gets you connected via PRAL, usually with just the two services scenarios. We are independent and not affiliated with FBR or PRAL. For invoices that don't involve sales tax, the free invoice generator works in PKR and other currencies.
Frequently asked questions
Is the sales tax on services in Islamabad 15% or 16%?
FBR's consolidated text of the ICT (Tax on Services) Ordinance, as amended to June 2025, shows 15% for most Table-1 services. Its footnote says the earlier 16% and 17% rates were replaced by the Finance Act 2022. Confirm the rate for your heading before billing.
Do I charge Islamabad sales tax to a foreign client?
Section 3(1A) of the Ordinance zero-rates the export of services, so a registered provider shows 0% on a genuine export. Confirm with your advisor that your service qualifies as an export.
Do restaurants in Islamabad charge 5% or 15%?
Under the current Table-1 entry, 5% applies where payment is received by debit or credit card, mobile wallet or QR (with no input tax adjustment), and 15% where payment is received in cash.
Islamabad mein consultancy par kitna sales tax hai?
FBR ke consolidated text ke mutabiq management consultancy par 15% hai. Purana 16% rate Finance Act 2022 se pehle ka tha. Apni service ka rate apne tax consultant se confirm karein.
Keep reading
- FBR Digital Invoicing for Services Businesses in Islamabad (ICT Sales Tax on Services)Who in Islamabad falls under STGO 05 of 2026, how service invoices differ from goods invoices in Digital Invoicing, and what to sort out before you integrate.
- Sales Tax Invoice Format in Pakistan (2026): Required FieldsA field-by-field checklist for a valid sales tax invoice in Pakistan under the Digital Invoicing rules, with a worked example and the mistakes buyers reject.
- How to Invoice International Clients: Currency, VAT, Payments and FormattingA practical guide to billing clients in other countries: choosing a currency, handling exchange rates and fees, VAT and reverse charge basics, and formatting invoices clearly.
- NTN vs STRN vs CNIC on Invoices: What Goes WhereThe three numbers explained, which one goes in the seller and buyer boxes, what changes for unregistered buyers and foreign clients, and the mistakes that get invoices rejected.