If your business provides services in Khyber Pakhtunkhwa, from construction and consultancy to restaurants, IT, advertising or event management, sales tax on those services is collected by the Khyber Pakhtunkhwa Revenue Authority (KPRA), not by FBR. Many businesses only discover this when a client deducts tax at source, a government department asks for a KPRA registration number in a tender, or a notice arrives. This guide explains who must register with KPRA, how registration works and what you must do every month once you are registered.
Quick answer: Any person providing a taxable service in Khyber Pakhtunkhwa must register with KPRA under the Khyber Pakhtunkhwa Sales Tax on Services Act, 2022, whether or not they are based in the province. Registration is done online through KPRA’s e-services portal using your NTN, CNIC and business details. The standard rate is 15% of the value of taxable services, with reduced or different rates for some services. Registered persons charge tax on their invoices, file a monthly return, deposit the tax by the due date and act as withholding agents where the law requires.
How sales tax on services works in Pakistan
Since the 18th Amendment, sales tax on services is a provincial subject. Goods are taxed federally by FBR, but services are taxed by the province or territory where they are provided: KPRA in Khyber Pakhtunkhwa, PRA in Punjab, SRB in Sindh, BRA in Balochistan, and FBR for the Islamabad Capital Territory. A business that works in several provinces may need more than one registration. If you also work in Punjab or Sindh, see our guides to PRA registration and SRB registration.
Who must register with KPRA?
You need KPRA registration if you provide a service listed as taxable under the Khyber Pakhtunkhwa Sales Tax on Services Act, 2022 and that service is provided in KP. Common examples include:
- Construction and works contracts, including subcontractors.
- Consultancy, engineering, accounting, legal and other professional services.
- Hotels, restaurants, caterers, wedding halls and event managers.
- IT, software and IT-enabled services, and advertising.
- Courier, cargo, transport and security services.
- Beauty parlours, clinics providing cosmetic services, gyms and similar personal services.
The tax applies to services rendered in KP whether the provider lives in the province or not. A Lahore or Islamabad firm executing a contract in Peshawar or Abbottabad can therefore be liable to KPRA for that work. KPRA also publishes a list of persons it has compulsorily registered, so check that list if you have received correspondence.
Documents you need
- NTN and active FBR profile. If you do not have one yet, start with our NTN registration guide.
- CNIC of the proprietor, partners or directors.
- Partnership deed, or SECP incorporation certificate and memorandum for a company.
- Business address in KP with proof of tenancy or ownership, if you have premises there.
- Bank account details in the business name.
- Description of the services you provide, and any contracts for work in KP.
- Mobile number and email for the online account, and utility bill of the premises.
How to register with KPRA step by step
- Create an account on KPRA’s e-services portal with your CNIC or NTN, mobile number and email.
- Complete the registration application with business type, principal activity, branches and the services you provide.
- Upload documents and the particulars of owners or directors.
- Submit and respond to queries. KPRA may ask for clarification or verify the premises.
- Receive your registration and start issuing tax invoices that show your KPRA number and the tax charged.
KPRA also runs registration drives and facilitation desks in different districts, which can help first-time registrants. Registration is free; the cost lies in getting the classification and record-keeping right.
KPRA sales tax rates
| Type of service | Rate |
|---|---|
| Standard rate on taxable services | 15% of the value of the service |
| Services notified at reduced rates | Lower rates, often without input tax adjustment |
| Telecommunication services | A higher, separately notified rate |
Rates are changed through provincial finance acts and notifications, so confirm the current rate for your exact service on KPRA’s rate schedule before invoicing. A reduced rate usually comes with a restriction on claiming input tax, so it is not always the cheaper option for a business with large taxable inputs.
Your obligations after registration
Tax invoices and records
Issue a proper tax invoice for every taxable service, with your registration number, the client’s details, the value and the tax. Keep contracts, invoices, bank records and input tax evidence for the period required by law.
Monthly return and payment
File a monthly return on KPRA’s e-filing system and deposit the tax by the due dates KPRA notifies, even for months with no sales. Nil returns matter: missed returns lead to penalties and can make your registration inactive.
Withholding
Government departments, companies and other prescribed persons may be required to withhold part of the KPRA tax when they pay for services. If you are a service provider, check that the tax withheld is reflected against your registration. If you are a withholding agent, deduct and deposit on time, because the liability falls on you if you do not.
Penalties for not registering or not filing
The Act provides penalties for failing to register, late filing, late payment and issuing invoices without registration, along with default surcharge on unpaid tax. KPRA can also register a person compulsorily and assess tax for past periods. Registering early, even before your first KP contract starts, is far cheaper than regularising later. If you have already received a notice, our guide to handling regulatory action sets out the first steps.
Common mistakes KP service providers make
- Assuming FBR sales tax registration covers services in KP. It does not.
- Charging the wrong province’s tax on a contract performed in KP.
- Not filing nil returns in months without sales.
- Claiming input tax on services taxed at a reduced rate where adjustment is barred.
- Forgetting to update branches and principal activity when the business changes.
Frequently asked questions
Who needs KPRA registration?
Anyone providing a taxable service in Khyber Pakhtunkhwa under the KP Sales Tax on Services Act, 2022, including providers based outside the province who perform work in KP.
What is the KPRA sales tax rate?
The standard rate is 15% of the value of taxable services. Some services have reduced or different notified rates, so check KPRA’s current rate schedule.
Is there a fee for KPRA registration?
KPRA does not charge a fee to register. You need an NTN, CNIC, business documents and details of the services you provide.
Do I need KPRA registration if I already have an STRN from FBR?
Yes, if you provide taxable services in KP. FBR sales tax registration covers goods and Islamabad services, not services in KP.
Do I file a KPRA return if I had no sales?
Yes. Registered persons must file a monthly return even when there are no taxable sales, to avoid penalties.
How CEC can help
Connect Engineers & Consultants registers service providers with KPRA, PRA, SRB and FBR, checks which province each contract falls under and sets up monthly filing so nothing is missed. See our tax compliance services.
Starting a contract in Khyber Pakhtunkhwa? Contact us and we will get your KPRA registration in place before you invoice.
Rates, due dates and procedures are set by the KP Sales Tax on Services Act, 2022 and KPRA notifications, which change regularly. Always confirm on KPRA’s website. This guide is general information, not tax advice.
