Sales tax invoice for Pakistan

Two different authorities can tax the same business in Pakistan. The Federal Board of Revenue taxes goods. Services are taxed by the province you supply them in, and each province runs its own revenue authority at its own rate. Getting the wrong one on an invoice is the most common mistake, and it is the one a buyer's accounts team notices first.

Which tax applies to you

If you sell goods, you charge federal sales tax and file with the FBR. If you sell services, such as design, software, consulting or marketing, you charge your province's sales tax on services and file with that province: the Punjab Revenue Authority, the Sindh Revenue Board, the Khyber Pakhtunkhwa Revenue Authority or the Balochistan Revenue Authority. If you do both, you deal with both.

The federal rate is 18 per cent of the value of taxable supplies, set by section 3 of the Sales Tax Act 1990. Sales Tax Act 1990, FBR consolidated text

Provincial rates on services are not the same as the federal rate and not the same as each other. Sindh and Khyber Pakhtunkhwa both charge 15 per cent. Punjab's published rate is 16 per cent and Balochistan's is 15 per cent, but both of those come from pages those authorities have not refreshed in years, so confirm the current figure with your own authority before you invoice. Invoicora marks those two rates as needing a check for exactly that reason.

What has to be on the invoice

Section 23 of the Sales Tax Act sets the particulars, and SRO 1006(I)/2021 standardised the layout. In practice a registered person issuing a sales tax invoice needs all of the following, and an invoice missing any of them can be rejected for input tax purposes by the buyer.

• A serial number, in an unbroken sequence
• The date of issue
• Your name, address and registration number
• The buyer's name, address and registration number where the buyer is registered
• A description of the goods or services, with quantity
• The value excluding tax, the rate applied, and the tax charged
• The total value including tax

Two numbers get confused constantly. Your National Tax Number is seven digits, or your thirteen digit CNIC if you are registered as an individual. Your Sales Tax Registration Number is a separate thirteen digit number, and it is the one a sales tax invoice has to carry. If you are registered for sales tax you have both, and both should appear.

The standardised invoice format, including the item-wise rate and the zero per cent line for exempt items, is set out in SRO 1006(I)/2021. SRO 1006(I)/2021

A worked example

A Lahore design studio bills a Karachi client for branding work. The service is supplied in Punjab, so Punjab's rate applies rather than the federal rate, even though the client is in Sindh. On a fee of PKR 250,000 at 16 per cent:

Rounding and amounts in words

Work in paisa and round once, at the end. Rounding each line separately and then adding up gives a different total from adding up and then rounding, and the difference is what shows up as a one rupee mismatch on a reconciliation. Invoicora calculates in whole paisa throughout and rounds half away from zero, which is the convention tax authorities expect. The amount in words is not legally required but most Pakistani buyers expect it, and it catches transposed digits before the invoice goes out.

What this tool does not do

Invoicora produces the document. It does not file anything with the FBR or any provincial authority, and it is not connected to the FBR's integration system. If your business is required to transmit invoices electronically, you still need whatever system your authority mandates. This is an invoice generator, not a filing service.