How to Remove Sales Tax from a Price in Pakistan

To remove 18% sales tax from a price that already includes it, divide the price by 1.18. The result is the price before tax, and the difference is the tax. So Rs 590,000 including tax splits into Rs 500,000 and Rs 90,000 of sales tax.

Our free sales tax calculator does this for you: select Includes tax (remove tax). Here's the working, along with the mistakes to avoid.

The formula

Price before tax = Total ÷ 1.18
Sales tax        = Total − Price before tax

Or, if you only need the tax:

Sales tax = Total × 18 ÷ 118

In Excel, with the total in cell A1:

Price before tax:  =ROUND(A1/1.18, 2)
Sales tax:         =A1-ROUND(A1/1.18, 2)

Why you can't just subtract 18%

The 18% is charged on the price before tax, not on the total. So tax makes up less than 18% of a tax-inclusive total: about 15.25%.

Take that Rs 590,000 total:

Method	Sales tax	Price before tax	Result
Correct: 590,000 ÷ 1.18	Rs 90,000	Rs 500,000	18% of 500,000 is 90,000 ✓
Wrong: 590,000 × 18%	Rs 106,200	Rs 483,800	Overstates the tax by Rs 16,200

You can always test your answer: 18% of your price before tax should equal your tax figure.

Worked examples

Small purchase: Rs 1,180 including tax 1,180 ÷ 1.18 = Rs 1,000 before tax. Sales tax is Rs 180.

A round figure: Rs 100,000 including tax 100,000 ÷ 1.18 = Rs 84,745.76 before tax. Sales tax is Rs 15,254.24.

A client's all-in budget: a client offers Rs 590,000 "including all taxes". If the tax is 18%, your sale is Rs 500,000 and Rs 90,000 is output tax, not income. Check this before you agree to a fee.

Lookup table at 18%

Total including tax (Rs)	Price before tax (Rs)	Sales tax (Rs)
1,000	847.46	152.54
5,000	4,237.29	762.71
10,000	8,474.58	1,525.42
25,000	21,186.44	3,813.56
50,000	42,372.88	7,627.12
100,000	84,745.76	15,254.24
250,000	211,864.41	38,135.59
500,000	423,728.81	76,271.19
1,000,000	847,457.63	152,542.37

Removing tax at other rates

The method works at any rate: divide by (1 + rate). Our guide to sales tax rates in Pakistan lists the reduced and special rates.

Situation	Divide by	Tax as a share of the total
Goods, standard rate (18%)	1.18	15.25%
Goods to an unregistered buyer (18% + 4% further tax)	1.22	18.03%
Service at 16%, such as Punjab's general rate	1.16	13.79%
Service at 15%, such as Sindh's general rate	1.15	13.04%
Service at a reduced 5%	1.05	4.76%

With further tax, divide by 1.22, then apply each rate to the result. Rs 61,000 ÷ 1.22 = Rs 50,000 before tax, with Rs 9,000 in sales tax and Rs 2,000 in further tax.

For the rate on your service, see our guide to sales tax on services by province. For the wider picture, see how sales tax is calculated in Pakistan.

When not to use this method

• Exempt and zero-rated goods. They carry no tax, so there's nothing to take out.
• Third Schedule goods. These are taxed on the manufacturer's or importer's retail price under their own rules, and the Act requires both the retail price and the sales tax amount to be printed on the pack. Use the printed figures rather than dividing by 1.18.
• Items with a different rate. Dividing by 1.18 is wrong if the item isn't taxed at 18%. A single total covering items at different rates needs splitting first.
• When you have a sales tax invoice. Use the tax figure on the invoice rather than recalculating it.

How to record input tax on a tax-inclusive purchase

Suppose your business, registered for sales tax, pays Rs 590,000 for goods. The entry is:

Account	Debit (Rs)	Credit (Rs)
Purchases	500,000
Input sales tax	90,000
Bank		590,000

Working out the tax doesn't by itself let you claim it. Before you claim the Rs 90,000:

• You need a tax invoice in your name and bearing your registration number (section 7). A till receipt showing a tax-inclusive price isn't enough.
• Pay through the bank above Rs 50,000. Section 73 generally requires payments above Rs 50,000 in total to a single supplier in a tax period to go through the banking channel from your business account.

Without a valid invoice, the full Rs 590,000 is normally your cost.

Frequently asked questions

How do I calculate 18% tax from a total amount? Divide the total by 1.18 to get the price before tax, then subtract it from the total. On Rs 118,000, the tax is Rs 18,000.

What percentage of an inclusive price is the tax? At 18%, about 15.25% of the total (18 ÷ 118).

Is reverse GST calculation the same as removing sales tax? Yes. In Pakistan, "reverse GST" usually means taking the 18% sales tax out of a price that already includes it.

What's the formula for 16% or 15%? Divide by 1.16 or 1.15. Services are generally taxed at these rates, depending on the province.

Skip the arithmetic

Enter any amount in the Pakistan sales tax calculator, pick the supply category and choose Includes tax (remove tax). It splits out the tax and any further tax on goods, and exports the result to Excel.

If your books need more than a quick check, our partners can handle your sales tax registration and monthly returns.

Sources: Sales Tax Act 1990, sections 3, 7 and 73 (FBR) · A Brief of Finance Act 2026 (KPMG)