Sales Tax Rate in Pakistan 2026-27: Is It 17% or 18%?

Pakistan's standard sales tax rate on goods is 18%, not 17%. The rate rose from 17% in February 2023, and it's set by section 3 of the Sales Tax Act 1990. Some goods are taxed at lower or higher rates, some at zero and some not at all. Services have separate provincial rates, generally 15% or 16%.

To apply these rates to an invoice, use our free Pakistan sales tax calculator.

Sales tax rates at a glance

Supply	Rate	Where it's set
Goods, standard rate	18%	Section 3(1)
Goods sold to an unregistered or inactive buyer	18% + 4% further tax	Section 3(1A)
Retail-packed consumer goods	18% of the retail price	Section 3(2)(a), Third Schedule
Reduced-rate goods	Rate listed for each item	Section 3(2)(aa), Eighth Schedule
Higher-rate goods	As notified by the government	Section 3(2)
Exports and other zero-rated goods	0%	Section 4, Fifth Schedule
Exempt goods	No tax	Section 13, Sixth Schedule
Services	Generally 15% or 16%	Provincial laws; ICT Ordinance in Islamabad

Why you still see 17% online

The 17% was the standard rate until 14 February 2023, when the government raised it to 18%. The Finance (Supplementary) Act 2023 then wrote the 18% into section 3. Older articles and some calculators were never updated.

The 2026 budget didn't change it. KPMG's summary of the Finance Act 2026 reports no change to the 18% rate, and the changes it does cover are to schedules and particular goods.

Reduced rates: the Eighth Schedule

The Eighth Schedule lists goods taxed below 18%, each with its own rate and conditions. Some examples:

Goods	Rate	Note
Locally manufactured electric vehicles (specified)	1%	Extended by the Finance Act 2026 up to 30 June 2027 for four-wheelers
Locally manufactured gold and precious metal jewellery	3%	No input tax adjustment
DAP fertiliser	5%	No refund of excess input tax
Second-hand and worn clothing or footwear	5%
Imported personal computers and laptops	10%
Solar photovoltaic cells and modules	10%	Conditions apply
Poultry feed, cattle feed and certain seed meals (local supply)	12% in 2026-27	Was 10% in 2025-26, and is scheduled to keep rising

The poultry feed entry shows why you should check the schedule each year: a reduced rate can have a built-in increase.

Zero-rated goods: 0%

Zero-rated goods are taxable, but at 0%. Under section 4, this covers:

• Goods exported from Pakistan
• Goods listed in the Fifth Schedule, such as supplies to diplomats and privileged organisations, and raw materials for manufacturing in Export Processing Zones
• Stores and provisions for a conveyance going to a destination outside Pakistan

The seller charges nothing on the invoice but can generally still claim input tax on related purchases. Exporters may therefore be due a refund.

Exempt goods: no tax

Exempt goods carry no sales tax, but the seller also can't recover input tax on related purchases. That's the key difference from zero-rating. The Sixth Schedule has two tables:

• Table-1, imports or supplies: includes pulses, the Holy Quran, and newsprint and books. The Finance Act 2026 added magazines, and also wheat and rice bran.
• Table-2, local supplies only: includes certain fresh and basic foods, such as vegetables, meat and milk products, but usually excludes branded or retail-packed versions.

Check the exact wording. Meat sold under a brand name, for example, is excluded from the exemption, so the same product can be exempt or taxable depending on how it's sold.

Retail price goods: the Third Schedule

For items such as soft drinks, cigarettes, soap, shampoo, toothpaste, cosmetics and tea, the 18% is charged on the manufacturer's or importer's retail price rather than the invoice value. The retail price and the sales tax amount must both be printed on the pack.

The Finance Act 2026 added more goods when sold in retail packing, including vegetable oils and fats, sugar confectionery, pasta and noodles, sauces, household utensils and some ceramic products. If you manufacture or import these, your tax base may have changed.

Higher rates

The federal government can notify rates above 18%. From 8 March 2023, it applied 25% to specified goods, including certain luxury imports and vehicles. Mobile phones have their own rates under the Ninth Schedule, based on the phone's value.

If you deal in imported consumer goods or vehicles, don't assume 18% applies. The extra 4% that is sometimes mistaken for a higher rate is further tax on sales to unregistered buyers, which comes on top of the 18%.

Rates on services

Services aren't taxed under the federal Act. The general rates are:

Where	Authority	General rate
Punjab	PRA	16%
Sindh	SRB	15%
Khyber Pakhtunkhwa	KPRA	15%
Balochistan	BRA	15% (confirm with BRA)
Islamabad	FBR	15%

See our full guide to sales tax on services by province for telecom, IT and which province's tax applies.

How to find the right rate for your product

1. Identify the goods and their tariff heading (the Pakistan Customs Tariff code).
2. Check the exemptions and zero-rating: the Sixth and Fifth Schedules.
3. Check for a reduced rate in the Eighth Schedule, including its conditions.
4. Check the Third Schedule if the goods are sold in retail packing.
5. Check for any notification that sets a higher or special rate.
6. If none apply, it's 18%.

If your supplier's price already includes tax, remove the tax first to find the value before tax. Once you have the rate, our guide to how sales tax is calculated shows the working.

Frequently asked questions

Is GST in Pakistan 17% or 18%? It's 18%. The rate rose from 17% on 14 February 2023.

What is the sales tax rate in Pakistan for 2026-27? The standard rate on goods remains 18%. Services are generally taxed at 15% or 16%, depending on the province.

What's the difference between zero-rated and exempt? Neither adds tax to the invoice, but a zero-rated seller can generally claim input tax on purchases, and an exempt seller can't.

Is there sales tax on food in Pakistan? It depends on the item and how it's sold. Many basic foods are exempt under the Sixth Schedule, but branded or retail-packed versions may be taxable, and the Finance Act 2026 added several packaged foods to the Third Schedule.

Does the rate change every year? The 18% hasn't changed since 2023, but schedules often change in the annual Finance Act, usually effective from 1 July.

Not sure which rate applies to you?

Run your figures through the free sales tax calculator. If your products sit across several schedules, our partners can review your rates and handle your returns.

Sources: Sales Tax Act 1990 (FBR) · A Brief of Finance Act 2026 (KPMG) · Pakistan increases Sales Tax and Federal Excise tax rates (EY)