The Balochistan Finance Act, 2025 (BFA) introduces a landmark transformation in the Balochistan Sales Tax on Services Act, 2015 (BSTSA), marking a decisive shift from the positive list to a negative list taxation system. Previously, only those services listed in both the First and Second Schedules were taxable under the Balochistan Sales Tax (BSTS) framework. The new regime now makes all services provided in Balochistan taxable, except those specifically exempted under the negative list.
This fundamental change simplifies and broadens the tax net, aligning the Balochistan Sales Tax system with global best practices and enabling a more transparent, comprehensive, and uniform provincial tax framework.
Adoption of CPC Codes – Harmonizing with International Standards
In a major step toward modernization, the Balochistan Revenue Authority (BRA) has officially adopted the Central Product Classification (CPC) coding system, Version 2.1, through a notification issued on July 1, 2025. This alignment with the United Nations’ standard classification aims to bring consistency and clarity to the taxation of services across sectors.
The adoption of CPC codes replaces numerous service-specific definitions in the BSTSA, ensuring better transparency, reduced ambiguity, and uniform interpretation of taxable services under the Balochistan Sales Tax law.
Expanded Definition of “Service”
The BFA broadens the definition of service beyond those listed in the previous schedules. The new definition now covers any activity, facility, utility, or advantage, including the grant, assignment, or surrender of any right. This redefinition significantly widens the tax base and clarifies the scope of taxable services in Balochistan, reducing interpretational disputes and ensuring equitable tax application across diverse industries.
Scope of Tax and Rate Structure
The revised structure retains the standard sales tax rate of 15%, while introducing:
- A Second Schedule for specified services subject to higher rates, and
- A Third Schedule for services taxed at reduced rates.
Exemptions have now been relocated to the First Schedule, in line with the new negative-list regime. Consequently, any service not expressly exempt is now deemed taxable, ensuring broader coverage and minimizing tax loopholes.
EXEMPTIONS
[FIRST SCHEDULE TO THE ACT]
| S. No. | DESCRIPTION | CONDITION FOR EXEMPTION |
|---|---|---|
|
1 |
Accommodation, food and beverage services
|
Services provided or rendered by caterers whose turnover does not exceed 2.5 million rupees in a financial year: Provided that the exemption shall not apply in case of service provider- (i) located within the building, premises or precincts of any hotel, motel, guest house, farmhouse or club whose services are liable to sales tax; (ii) providing or rendering services in the building, premises, precincts, hall or lawn of any hotel, motel, guest house, farmhouse, marriage hall or lawn or club whose services are liable to sales tax; (iii) which are franchisers or franchisees; (iv) having branches or more than one outlet ; and whose total utility bills (gas, electricity and telephone) exceed Rs. 40,000/- in any month during a financial year or have a solar setup for electricity generation or are using LPG..
|
|
2
|
Tour Operators
|
Services provided or rendered by tour operators in relation to Hajj and Umrah tour packages. 19.50%
|
|
3 |
Renting of immovable property services
|
Renting of immovable property services provided or rendered to an individual person whose income does not exceed the maximum amount that is not chargeable to tax under the Income Tax Ordinance 2001(XLIX of 2001)
|
|
4 |
Service provided or rendered by persons engaged in contractual execution of work or furnishing supplies
|
Services provided or rendered by persons engaged in contractual execution of work or furnishing supplies in relation to the text books, published for free distribution amongst students free of cost, against the order Balochistan Textbook Board subject to the conditions that the Balochistan Textbook Board:- a) assigns the work to a person duly registered under the Balochistan Sales Tax on Services Act, 2015; and b) furnishes, to the Authority, statement on quarterly basis, showing name of person/contractor, BNTN, value of such contract, along with certificate about the free of cost distribution of such textbooks amongst the students.
|
|
5 |
Storage and warehousing services
|
The exemption shall apply to services provided or rendered in relation to food and agricultural commodities.
|
|
6 |
Central banking services
|
The exemption shall be applicable to services provided or rendered by the State Bank of Pakistan.
|
|
7 |
Legal and accounting services
|
Where the services are rendered and funded under an agreement of foreign grant-in-aid or interest free loan
|
|
8 |
Management consulting and management services
|
Where the services are rendered and funded under an agreement of foreign grant-in-aid or interest free loan
|
|
9 |
Architectural advisory services
|
Where the services are rendered and funded under an agreement of foreign grant-in-aid or interest free loan
|
|
10 |
Veterinary services
|
None.
|
|
11 |
Advertising services and the provision of advertising space or time
|
(i) Advertisements financed out of funds provided by the Government under grant-in-aid agreements. (ii) Advertisements conveying a public service message in relation to the polio eradication program by UNICEF. |
|
12 |
Support and operation services to agriculture, hunting, forestry and fishing
|
The exemption shall be applicable to services provided or rendered in relation to: (1) services of provision of agricultural machinery with crew and operators; or (2) support and operation services to hunting.
|
|
13 |
Maintenance and repair services of fabricated metal products, machinery and equipment
|
The exemption shall be applicable to services provided or rendered in relation to machinery and equipment used for the purpose of agriculture, horticulture, animal husbandry and dairy farming.
|
|
14 |
Public administration and other services provided to the community as a whole, compulsory social security services
|
The exemption shall apply to services provided or rendered by the Federal Government, Government of Balochistan and Local governments.
|
|
15 |
Education services
|
None.
|
|
16 |
Services provided or rendered by hospitals and clinics
|
Services of provision of rooms/beds by hospitals and clinics for its indoor patients or day-care patients where the per day charges (including allied fixed charges, if any) for such rooms/beds below Rs. 40,000 per room/bed;
|
|
17 |
Accountants and auditors
|
Accountants and auditors’ services exported and delivered by registered persons outside Pakistan subject to the condition that the value of export of the services is received in foreign exchange through banking channels in the business bank accounts of the registered person exporting the services and is also reported to the State Bank of Pakistan in the manner prescribed by the State Bank of Pakistan
|
|
18 |
Software or IT-based system development consultants’ services exported, by registered persons, outside Pakistan subject to the condition that the value of export of the services is received in foreign exchange through banking channels in the business bank accounts of the registered person exporting the services and is also reported to the State Bank of Pakistan in the manner prescribed by the State Bank of Pakistan
|
Software or IT based system development consultants
|
|
19 |
Fumigation services
|
(i) Public health fumigation services provided or rendered by the Federal, Provincial or Local Government and Cantonment Boards; and (ii) Agricultural fumigation services. |
|
20 |
Construction services
|
Construction services related to: (i) Construction and development of EPZ, SEZ, and diplomatic and consular buildings. (ii) Construction of an independent private residential house, other than a residential unit, having a total covered area not exceeding 10,000 square feet; and (iii) Construction relating to such of the low cost affordable public housing projects as are sponsored and funded by the Federal Government or by Government of Balochistan subject to the condition that the houses are built or constructed on plot of up to 125 square yards or the covered area of the apartment and flats, so built or constructed under the project, does not exceed 900 square feet. (iv) Construction Services for which payment is made from Provincial Consolidated Fund and Federal Consolidated Fund in respect of works approved and started before FY 2016-17 and still ongoing, subject to the condition that no project/scheme cost revision in the PCI has been made after 2016-17. |
|
21 |
Services provided or rendered by call centres |
Call center services exported and delivered by registered persons to persons outside Pakistan subject to the condition that the value of the export of the service is received in foreign exchange through banking channels in the business bank accounts of registered person exporting the services and is also reported to the State Bank of Pakistan in the manner prescribed by the State Bank of Pakistan.
|
|
22 |
Marine insurance
|
Marine insurance for export.
|
|
23 |
Residential care services for the elderly and disabled; and
|
The exemption shall apply to services provided or rendered by a home or hostel which is exclusively used for the aged or special persons or children and is run by or under the control of such a charitable or educational institution as are eligible for tax credit under section 100C of the Income Tax Ordinance, 2001 (Ordinance No. XLIX of 2001).
|
|
24 |
Other social services with accommodation
|
The exemption shall be applicable to services provided or rendered by a home or hostel which is run by or under the control of such a charitable or educational institution as are eligible for tax credit under section 100C of the Income Tax Ordinance, 2001 (Ordinance No. XLIX of 2001).
|
|
25 |
Services provided by extraterritorial organizations and bodies
|
None.
|
|
26 |
Protection of foreign investment of US$ 1.5 Billion or more:-
|
All foreign investment of US$ 1.5 billion or more, made into the province of Balochistan, in any section, industries or projects, shall be exempted from provision of Sales Tax on Servies under the Balochistan Sales Tax on Servies Act, 2015
|
SERVICES SUBJECT TO HIGHER RATE OF TAX
[SECOND SCHEDULE]
| S. NO. | DESCRIPTION | RATE |
|---|---|---|
|
1
|
Hosting and information technology (IT) infrastructure provisioning services
|
19.50%
|
|
2 |
Telecommunications services, including telephony, mobile services, and data transmission
|
19.50%
|
|
3 |
Internet telecommunications services
|
19.50%
|
|
4 |
Security systems services (including vehicle tracking services and other tracking) |
19.50%
|
|
5 |
Installation services of radio, television and communications equipment and apparatus
|
19.50%
|
SERVICES SUBJECT TO LOWER RATE OF TAX
[THIRD SCHEDULE]
| S. NO. | DESCRIPTION | RATE (AND CONDITION, IF ANY) |
|---|---|---|
|
1 |
Services provided or rendered by restaurants, including café, coffee houses, food huts, ice-cream shops and eateries.
|
8% Input tax credit/adjustment shall not be admissible. |
|
2% (i) The registered person installs POS machine for electronic issuance of invoices or receipts and gets all such machines linked up with BRA web portal to the satisfaction of BRA; (ii) The registered person issues his tax invoice/bills of charges or receipts electronically and no tax invoice/bill of charges or receipt is issued otherwise except through the POS of the registered person; and (iii) Input tax credit/ adjustment shall not be admissible. Provided that this reduced rate shall not apply in case of the restaurants:- which are located within the building, premises or precincts of a hotel, motel, guest house or club whose services are liable to tax; which are franchisers or franchisees; |
||
|
2 |
Services provided or rendered by marriage halls, lawns, mandap, pandal and shamiana, including floral and decoration, etc
|
10,000 rupees per event or 2% of Service fees, whichever is higher. Input tax credit/adjustment shall not be admissible. |
|
3 |
Customs Agents
|
1000 Rupees per Goods Declaration Services provided by Customs Agents in respect of the issuance of a goods declaration |
|
4 |
Travel agents
|
100 Rupees per Air Ticket Services provided by Travel Agents in respect of the issuance of domestic and international air Tickets Input tax credit/adjustment shall not be admissible. |
|
5
|
Tour operators
|
5% Input tax credit/adjustment shall not be admissible. |
|
6 |
Recruiting agents
|
5% Standalone Recruiting Agents involved in recruitment of individuals and group of individuals for overseas employment in countries outside Pakistan |
|
7 |
Services on purchase or sale or hiring of immoveable property
|
5% Input tax credit/adjustment shall not be admissible. |
|
8 |
Car or automobile dealers
|
10% Input tax credit/ adjustment shall not be admissible |
|
9 |
Services provided or rendered by property developers or promoters for: a) development of purchased or leased land for conversion into residential or commercial plots. (b) construction of residential or commercial units |
100 rupees per square yard of land; and 50 rupees per square foot of constructed covered area. Input tax credit/adjustment shall not be admissible. |
|
10 |
Service provided or rendered by persons engaged in contractual execution of work or furnishing supplies
|
4% Services in relation to Government Civil Works for which the expenditure is paid out of the expenditure budget of the Federal Government or the Provincial Government or the Local Government, or the Cantonment Board. Input tax credit/ adjustment shall not be available. |
|
11 |
Services provided or rendered for personal care by beauty parlours, beauty clinics, slimming clinics or centres and others
|
5% Input tax credit/ adjustment shall not be admissible. |
|
2% The registered person installs POS machine for electronic issuance of invoices or receipts and gets all such machines linked up with BRA web portal to the satisfaction of BRA;
The registered person issues his tax invoice/bills of charges or receipts electronically and no tax invoice/bill of charges or receipt is issued otherwise except through the POS of the registered person; and
Input tax credit/ adjustment shall not be admissible. |
||
|
12 |
Services provided or rendered by laundries and dry cleaners
|
5% Services provided or rendered by stand- alone laundries and dry cleaners:- Input tax credit/ adjustment shall not be admissible |
|
13 |
Services provided or rendered by foreign exchange dealer or exchange company or money changer
|
3% Services provided or rendered by a foreign exchange dealer or exchange company or money changer in consideration of “spread” changes as permitted by the State Bank of Pakistan in relation to the buying and selling of foreign currencies; and Input tax credit / adjustment shall not be admissible. |
|
14 |
Property developers or promoters. (a) development of purchased or leased land for conversion into residential or commercial plots. (b) construction of residential or commercial units |
100 rupees per square yard of land; and 50 rupees per square foot of constructed covered area Input tax credit/adjustment shall not be admissible |
|
15 |
Medical practitioners
and consultants
|
2% or Rs 3000 per month which is higher Input tax credit/adjustment shall not be admissible |
|
16 |
Legal practitioners and consultants
|
2% or Rs 100 per case (i)Rs 100/ shall be deposited as fixed Sales tax at the time of filing of each case, appeal, or petition, and proof of which shall be attached with the power of Attorney/Vakalat Nama. (ii) The fixed rate specified under column (3) shall not be applicable to all services provided or rendered by Corporate Law Consultants. Input tax credit / adjustment shall not be admissible. |
|
17 |
Accountants and auditors
|
8% The reduced rate specified in column (3) shall apply only in relation to accounting and auditing services provided or rendered by accountants and auditors. Input tax credit/ adjustment shall not be admissible. |
|
18 |
Technical, scientific and engineering consultants
|
6 % (i) Where expenditure is paid out of the budget of the Federal Government or the Provincial Government or the Local Government, or the Cantonment Board (ii) Input tax credit/ adjustment shall not be available. |
|
19 |
Software or IT based system development consultants
|
2% The registered person electronically submits his election/option; and Input tax credit/adjustment shall not be admissible. |
|
20 |
Other consultants including tax consultants, human resources and personnel development consultants
|
8% Input tax credit / adjustment shall not be admissible. |
|
21 |
Services provided or rendered by laboratories relating to pathological, radiological or diagnostic test of patients
|
2% Input tax credit/ adjustment shall not be admissible. |
|
22 |
Indenters |
3% Services provided or rendered by an indenter from a place of business in Balochistan for which the registered person receives the value of the services from a place outside Pakistan in foreign exchange through banking channels in the business bank account of the registered person in the manner prescribed by the State Bank of Pakistan; and Input tax credit/adjustment shall not be admissible. |
|
23 |
Commission agents
|
4% Input tax credit/ adjustment shall not be admissible. |
|
24 |
Money exchanger
|
3% Services provided or rendered by money exchanger in consideration of “spread” charges as permitted by the State Bank of Pakistan in relation to the buying and selling of foreign currencies. Input tax credit/ adjustment shall not be admissible. |
|
25 |
Rent a car and automobile rental Service
|
8% Input tax credit/ adjustment shall not be admissible. |
|
26 |
Cable TV Operators
|
2% The reduced rate of 2% as specified in column (3) shall apply on the services of “Standalone Cable TV Operators”. Input tax credit/adjustment shall not be admissible. |
|
27 |
Auctioneers |
10% Input tax credit/adjustment shall not be admissible. |
|
28 |
Health care center, gyms or physical fitness center, etc.
|
2% The registered person installs POS machine for electronic issuance of the invoices or receipts and gets all such machines linked up with BRA web portal to the satisfaction of BRA; The registered person issues his tax invoices/bill of charges or receipts electronically and no tax invoice or/bill of charges or receipt is issued otherwise except through the POS of the registered person; and Input tax credit/adjustment shall not be admissible. |
|
29 |
Janitorial services
|
10%
Input tax credit/ adjustment shall not be admissible.
|
|
30 |
Dredging or desilting services
|
10% Input tax credit/ adjustment shall not be admissible. |
|
31 |
Franchise services
|
10% Input tax credit/adjustment shall not be admissible. |
|
32 |
Construction services
|
8% Input tax credit/adjustment shall not be admissible. |
|
1% Construction services in relation to Government Civil Works for which the expenditure is paid out of the expenditure budget of the Federal Government or the Provincial Government or the Local Government, or the Cantonment Board Input tax credit/ adjustment shall not be available. |
||
|
33 |
Services provided or rendered by corporate law consultants
|
8% Input tax credit/ adjustment shall not be admissible. |
|
34 |
Services provided or rendered by call centers
|
2% The registered person electronically submits his election or option: Input tax credit/adjustment shall not be admissible. |
|
35 |
Services provided or rendered by persons engaged in transportation or carriage of goods by road or through pipeline or conduit
|
10% Input tax credit/adjustment shall not be admissible. |
|
3% Services provided or rendered by persons engaged in transportation or carriage of goods by road or through truck addas or through bus/wagon stands excluding road transportation or carriage of petroleum oils through oil tankers Input tax credit/adjustment shall not be admissible. |
||
|
36 |
Intellectual Property Services
|
10%
Input tax credit/adjustment shall not be admissible.
|
|
37 |
Cosmetic and plastic surgery and Transplantations
|
4% Input tax credit/adjustment shall not be admissible. |
|
38 |
Supply chain management or distribution (including delivery) services
|
10% Input tax credit/adjustment shall not be admissible. |
|
39 |
Services provided or rendered by cab aggregator and the services provided or rendered by the owners or drivers of the vehicles using the cab aggregator services
|
2%
Input tax credit/adjustment shall not be admissible.
|
|
40 |
Warehouse or depots for storage or cold storages
|
5%
Input tax credit/adjustment shall not be admissible.
|
|
41 |
Training services
|
5%
Input tax credit/adjustment shall not be admissible.
|
|
42 |
Insurance agents
|
5%
Input tax credit/adjustment shall not be admissible.
|
|
43 |
Services provided or rendered by hospitals and clinics
|
2% Input tax credit/adjustment shall not be admissible. |
Principle of Origin and Reverse Charge Mechanism
Under the Balochistan Finance Act 2025, registered withholding agents are now responsible for deducting and depositing the full tax amount on taxable services received.
A key addition involves international telecommunication services, where telecom operators in Pakistan are liable to pay sales tax on a reverse charge basis for their share of charges from incoming international calls. This ensures that foreign service components are effectively captured within the Balochistan tax net.
The government may further expand the list of reverse-charge categories by official notification, ensuring flexibility in addressing cross-border and inter-provincial service arrangements.
Government Empowered to Amend Schedules
The power to amend Schedules has now been centralized with the Government of Balochistan, acting on recommendations from the BRA. Any addition, deletion, or modification can now be made through an official gazette notification, streamlining policy responsiveness and administrative control.
Revised Definition of Economic Activity
The BFA replaces the earlier definition with a broader, inclusive one covering any activity involving provision, supply, or receipt of a service for consideration, whether conducted regularly or occasionally.
The term now explicitly includes:
- Commercial, professional, or not-for-profit activities;
- Digital and online service platforms;
- Inter-provincial and cross-border services received or consumed in Balochistan; and
- Barter, in-kind, or indirect benefits.
This update ensures comprehensive taxation of digital economy transactions and remote service delivery.
Valuation of Taxable Services
Tpenahe Act clarifies that consideration means the gross amount charged by a service provider, including reimbursable expenses. This expansion aims to capture all monetary and in-kind payments related to taxable services, reducing avoidance and ensuring fair valuation under Balochistan Sales Tax.
Transitional Provisions
Existing exemption notifications remain valid until amended or withdrawn, ensuring regulatory continuity during the transition to the new schedules.
Person Liable to Pay Tax
The liability to pay Balochistan Sales Tax now extends to all persons, whether registered or not. Unregistered persons engaged in taxable activities cannot claim immunity due to non-registration, reinforcing compliance across the province.
Input Tax Restrictions and Adjustments
The reforms tighten input tax rules by:
- Applying the Rs. 50,000 limit on a per-person basis per tax period, rather than per transaction;
- Restricting input tax on capital goods not exclusively used for taxable services; and
- Capping input tax adjustment at 90% of output tax for any period.
These measures promote transparency and curb abuse of input tax credits.
Joint and Several Liability
The Act introduces joint and several liabilities where the recipient knew or had reason to suspect non-payment of tax by the service provider. This creates shared responsibility and encourages due diligence among taxpayers.
Transfer of Business or Taxable Activity
Tax is now payable on the transfer of business as a going concern to an unregistered person, ensuring continuity of tax liability under the Balochistan Sales Tax system.
Deemed Registration for Withholding Obligations
Persons responsible for withholding or depositing tax, even if not otherwise required to register, are now deemed registered. This ensures universal compliance and digital traceability across taxable transactions.
Audit and Enforcement Enhancements
Audit proceedings can now be conducted at the taxpayer’s business premises with the Commissioner’s prior approval, strengthening field enforcement under BRA’s audit framework.
Enhanced Penalties and Offences
The Balochistan Finance Act 2025 revises penalties for non-compliance with e-invoicing systems, digital integration, and record-keeping requirements. Repeat violations can result in business sealing or imprisonment, underscoring the government’s commitment to enforce digital tax compliance.
| S. NO. | OFFENCE | PENALTY |
|---|---|---|
|
2B |
Where a person avoids, defies, fails to comply with the e-invoicing system or issues invoices outside the e-invoicing system or refuses, denies, or obstructs the enforcement of the provisions of section 60A in any manner.
|
Such person shall be liable to pay a penalty of up to one hundred thousand rupees, but not less than ten thousand rupees. In case of repetition of the offence, the business premises of such person shall further be liable to sealing. Such person shall further be liable, upon conviction by a Special Judge, to imprisonment which may extend to one year or with fine which may extend to one hundred thousand rupees or with both
|
|
2C |
Where a person avoids, defies, delays or fails to deposit the amount of service fee levied under the Balochistan Sales Tax on Services Special Procedure (Online Integration of Business) Rules, 2022 or fails to report the service fee in the sales tax return in the prescribed manner
|
Such person shall be liable to a penalty of rupees one hundred thousand or twice the amount of service fee involved, whichever is higher.
Such person shall further be liable, upon conviction by the Special Judge, to imprisonment which may extend to one year or with fine which may extend to one hundred thousand rupees, or with both.
|
|
5 |
Where any person fails to provide the document or record or information or data or refuses to allow the officer of the Authority to take extracts from or make copies of the document or record or information or data or fails to appear before an officer of Authority or fails to answer any question put to him.
Provided that if record is not produced despite issuance of three notices over a period of three months, it shall be considered as sufficient evidence that the person has failed to maintain record.
|
Such person shall be liable to pay penalty of one hundred thousand rupees on every default.
Such person shall, further be liable, upon conviction by a Special Judge, to imprisonment for a term which may extend to one year or fine which may extend to 100,000 rupees or with both.
|
|
7A |
Where a person denies or obstructs the entry or access of the officer of the Authority posted to his business premises or fails to facilitate the officer of the Authority in the discharge of his duty to monitor the provision of services by such person. |
Such person shall be liable to a penalty of 100,000 rupees or twice the amount of the minimum tax, as may be assessed or determined under section 24, whichever is higher.
Such person shall further be liable, upon conviction by the Special Judge, to imprisonment which may extend to one year or with fine which may extend to one hundred thousand rupees, or with both.
|
Waiver of Penalty and Default Surcharge
The BRA may now grant general or case-specific exemptions from penalties and surcharges through notification in the official Gazette, expanding its discretionary powers beyond the earlier Rs. 5 million cap.
Extended Limitation Period for Recovery
The time limit for issuance of show cause notices for unassessed or under-assessed tax has been extended from five years to eight years, aligning with other provincial tax authorities for consistency.
Unpaid and Short-Paid Amounts Recoverable Without Notice
The scope of summary recovery has expanded to include both unpaid and short-paid amounts discovered through seized records or electronic data. However, bank attachment now requires prior approval from the Commissioner or BRA, ensuring due oversight.
Conclusion – Balochistan’s Shift to a Modern Sales Tax Framework
The Balochistan Finance Act 2025 represents one of the most comprehensive overhauls of a provincial sales tax system in Pakistan. By transitioning to a negative list regime, adopting CPC codes, and enhancing compliance measures, the Balochistan Revenue Authority has taken a decisive step toward digital governance, fiscal transparency, and harmonization with global tax standards.
FAQs — Balochistan Finance Act 2025
1) What’s the biggest change introduced by the Balochistan Finance Act 2025 (BFA)?
The BFA shifts the Balochistan Sales Tax on Services (BSTS) from a positive list to a negative list regime—meaning all services are taxable unless explicitly exempted in the First Schedule. This widens the tax base and reduces loopholes.
2) What is a “negative list” in Balochistan Sales Tax?
Under a negative list, tax applies by default. Only services specifically listed as exempt remain untaxed. If a service isn’t on the exemption list, assume it’s taxable.
3) Has Balochistan adopted CPC codes? Why does that matter?
Yes. The Balochistan Revenue Authority (BRA) adopted UN CPC v2.1 (notification dated July 1, 2025). CPC alignment standardizes service classification, improves consistency, and reduces ambiguity across sectors.
4) How has the definition of “service” changed?
“Service” now broadly includes any activity, facility, utility, advantage or grant/assignment/surrender of rights, capturing modern, hybrid, and digital offerings that previously fell into grey areas.
5) What are the standard and special rates now?
The standard rate remains 15%. The Second Schedule lists higher-rate services; the Third Schedule lists reduced-rate services (often with no input tax credit).
6) Where do exemptions appear now?
Exemptions live in the First Schedule (negative list framework). Examples include central banking services, certain education and health-related room charges, public administration, and exports of specified professional/IT services subject to foreign exchange realization conditions.
7) Which services are taxed at higher rates?
Highlighted in the Second Schedule: hosting & IT infrastructure, telecom/telephony, internet telecom, security/vehicle tracking, and installation of communications equipment, typically 19.5%.
8) Which services enjoy lower or special rates?
The Third Schedule covers many sectors (e.g., restaurants, marriage halls, travel agents, tour operators, recruiting agents, property transactions, beauty parlours, labs, call centers, transport of goods, cable TV, hospitals/clinics) with reduced or fixed rates—often without input tax adjustment and sometimes subject to POS/e-invoicing conditions.
9) Are reimbursable expenses now part of the taxable value?
Yes. “Consideration” = gross amount charged, including reimbursable expenditures billed in the course of providing a service.
10) Who is liable to pay Balochistan Sales Tax now?
All persons (registered or not) providing taxable services are liable. Non-registration does not absolve liability.
11) What changed in withholding and reverse charge?
Registered withholding agents must deduct and deposit the full tax on taxable services received. Plus, incoming international calls: Pakistani telecoms pay tax on a reverse charge for their share. The Government may add more reverse-charge categories via notification.
12) What is the new “economic activity” scope?
It now explicitly covers commercial/professional & not-for-profit activities, digital/online platforms, inter-provincial and cross-border services consumed in Balochistan, and barter/in-kind/indirect benefits.
13) How much input tax can I adjust in a tax period?
Input adjustment is capped at 90% of the output tax for that period.
14) Are there new input tax restrictions?
Yes.
- The Rs. 50,000 cash-payment limit applies per person per tax period (not per transaction).
- Capital goods (plant, machinery, etc.) not exclusively used for taxable services: no input credit.
15) What about joint and several liability?
If a recipient knew or had reason to suspect the provider’s non-payment of tax, both parties can be jointly and severally liable. Recipients must exercise due diligence to ensure tax is deposited.
16) What happens on transfer of business as a going concern?
A registered person transferring an ongoing concern to an unregistered person must pay tax on the services supplied in that transfer.
17) Do I need to register if I only withhold tax?
Yes. Persons required to withhold or otherwise pay tax are deemed registered and must complete BRA registration/enrolment formalities.
18) How will audits be conducted now?
With the Commissioner’s approval, BRA may conduct on premise audits at the taxpayer’s place of business and require production of records at specified premises.
19) Can BRA waive penalties/default surcharge?
Yes. BRA may grant case-specific or general exemptions via Gazette notification (authority expanded beyond the earlier Rs. 5 million cap).
20) What is the new limitation period for recovery?
The period for issuing show cause notices is extended from 5 years to 8 years from the end of the relevant financial year.
21) Can BRA recover unpaid/short-paid tax without a notice?
Scope expanded to include unpaid and short-paid amounts found in returns or seized/electronic records. Bank account attachment now requires prior approval of the Commissioner/BRA.
22) Do existing exemption notifications survive the shift to the new schedules?
Yes. Transitional provisions keep existing exemption notifications valid until amended or rescinded.
23) Are there special exemptions worth noting?
Among others: tour operators (Hajj/Umrah context), certain agri/food storage, State Bank of Pakistan, government/public administration, specified hospital room charges, exports of accounting/audit and IT services (subject to FX realization), and foreign investments ≥ USD 1.5B into Balochistan projects.
24) What compliance tips should businesses follow now?
- Map services to CPC codes and verify rate/exemption status.
- Enable POS/e-invoicing where conditions apply; link to the BRA portal.
- Review contracts for reverse charge/withholding and reimbursable cost clauses.
- Tighten vendor due diligence to mitigate joint and several liability.
- Track input caps (90%), cash thresholds, and capital-goods usage.
- Maintain audit-ready electronic records.
