Federal capital: FBR plans to expand scope of ST on services

ISLAMABAD: The Federal Board of Revenue (FBR) is planning to expand the scope of sales tax on services within the territorial jurisdiction of federal capital in budget (2025-26).

However, changes in withholding tax regime may include increased withholding tax rates on e-commerce platforms.

Under the Islamabad Capital Territory (Tax on Services) Ordinance, 2001, the FBR is charging 15 percent sales tax on a wide range of services including Services provided or rendered by hotels, motels, guest houses, farmhouses,

Marriage halls, lawns, clubs and caterers; IT services and IT-enabled services and other services.

It is learnt that the FBR may impose sales tax on Ride Hailing Services operating in federal capital from next fiscal year. In this regard, the FBR is likely to introduce a 4% tax on CAB aggregators operating in Islamabad Capital Territory.

Presently, Provincial Revenue Authorities are charging 5% sales tax on services provided by Ride Hailing Services.

Copyright Business Recorder, 2025