Sales tax invoices in Pakistan: what a compliant invoice shows

What must a sales tax invoice in Pakistan show?

A sales tax invoice in Pakistan is expected to identify the seller, the buyer, the supply and the tax. The exact required details are set by the relevant law and by your revenue authority, and they can differ for goods and services. Confirm the list that applies to your business with your tax advisor or the authority you are registered with.

A simple test: could someone holding only the invoice work out who sold what to whom, when, for how much, and how much of that was tax? If not, something is missing. In practice, an invoice shows:

• Seller: name, address and registration number.
• Buyer: name and address, plus their registration number when they are a registered person.
• Invoice number: unique and in sequence, so every invoice can be traced and a missing one shows up.
• Date of issue.
• Description of the goods or services supplied, with quantity where it applies.
• Value excluding tax.
• The sales tax rate applied, and the tax amount in rupees.
• The total amount payable, including tax.

Who charges the sales tax, the FBR or the province?

In Pakistan, the FBR administers sales tax on goods at the federal level. Sales tax on services is administered by the provinces through their own revenue authorities: the Punjab Revenue Authority (PRA), the Sindh Revenue Board (SRB), the Khyber Pakhtunkhwa Revenue Authority (KPRA) and the Balochistan Revenue Authority (BRA). Services in Islamabad Capital Territory fall under the FBR. So two businesses doing similar work in different provinces can be registered with different authorities and charge different rates.

For a shopkeeper, this means the authority you deal with, the rate you apply and the numbers on your invoice all depend on what you sell and where you are. A restaurant in Lahore and a restaurant in Karachi are in different systems.

What are the sales tax rates by province?

These are the standard rates NexusTill uses as defaults. Many sectors, items and services have reduced rates, special rates or exemptions in every one of these jurisdictions, and rates are revised from time to time. Use them as a starting point, and confirm the rate for your own supply with your advisor or authority.

• Punjab: Punjab Revenue Authority (PRA), 16%
• Sindh: Sindh Revenue Board (SRB), 13%
• Khyber Pakhtunkhwa: KP Revenue Authority (KPRA), 15%
• Balochistan: Balochistan Revenue Authority (BRA), 15%
• Islamabad Capital Territory: FBR, 15%
• Federal sales tax on goods: FBR, 18%

Do I need to issue a tax invoice for every sale?

Not every business, and not every sale. The duty to issue sales tax invoices applies to registered persons, and whether you must register depends on rules the FBR or your provincial authority sets for your sector and circumstances. A small unregistered retailer generally gives customers an ordinary receipt. Once you are registered, or your customers are registered businesses that need an invoice to claim input tax, the requirement applies to you. Ask your tax advisor whether you need to register. It is worth paying someone once for a proper answer.

This post does not cover filing deadlines, penalty amounts, or the thresholds at which registration becomes mandatory. Those details are specific and they change, and a wrong figure from a blog post is worse than none. Get them from the FBR, your provincial authority or your advisor.

How do you keep receipts and tax invoices in one place?

Most Pakistani shops need both documents. The everyday sale gets a quick receipt. Some sales need the full tax invoice, with both parties' details and the tax shown separately. The mistake is keeping these in two separate systems: the day's takings never reconcile, and you can't easily say what you sold.

NexusTill issues both from the same sale: a quick receipt for the walk-in customer and a proper tax invoice when the customer needs one. It applies your jurisdiction's rate as the default, with per-product rates for items taxed differently, and keeps a record of what you charged in one place. It does not decide whether you should be registered, which rate applies to your supply, or when you should file. Those are questions for your tax advisor and your revenue authority.

What should you check before relying on this?

1. 1Confirm which authority you fall under: the FBR for goods, or your provincial authority for services.
2. 2Confirm whether you are required to register, and if so, register properly.
3. 3Confirm the exact rate for what you sell, including any reduced rate or exemption for your sector.
4. 4Confirm the invoice details your authority requires, and set your invoice template to match.
5. 5Ask your tax advisor to check one real invoice before you issue a hundred.

Written by The NexusTill team.