KPRA grants GST relief to eligible FATA/PATA units

ISLAMABAD: The Khyber Pakhtunkhwa Revenue Authority (KPRA) has exempted eligible industrial undertakings operating in the erstwhile tribal areas (FATA/PATA) from payment of the whole of sales tax on taxable services received by them.

According to a notification issued by KPRA, the exemption has been granted under the Khyber Pakhtunkhwa Sales Tax on Services Act, 2022, with the approval of the provincial government.

The exemption is subject to the condition that the industrial undertaking is physically situated and carrying on commercial activities in the erstwhile Federally Administered Tribal Areas and Provincially Administered Tribal Areas (ex-FATA and PATA) and is registered solely as a withholding agent under the Act.

The taxable services must be received exclusively for carrying out the commercial activities of the eligible industrial undertaking and must be physically rendered, performed and consumed within the erstwhile FATA and PATA areas.

However, no exemption will be available for taxable services rendered or performed from outside these areas, including transportation of goods, insurance and security services, or services which by their nature are not confined to the said areas.

The exemption will also not apply to services provided through electronic, digital, virtual, online or other remote means, even where such services are received, consumed or utilised by an eligible industrial undertaking within the erstwhile FATA and PATA areas.

The eligible industrial undertaking will be required to declare complete particulars of all taxable services received in its sales tax return or withholding statement, along with prescribed records and documents.

The notification states that where KPRA finds that any condition has not been fulfilled, or any material fact has been concealed, mis-declared or incorrectly reported, the exemption will stand withdrawn for the relevant tax period and the exempted tax will become recoverable under the law.

For purposes of the exemption, an eligible industrial undertaking means an independently owned and managed industrial unit established and carrying on industrial activities in the erstwhile FATA and PATA areas.

The eligible sectors included manufacturing, mineral processing, agro-based, forestry and wood-based, engineering and fabrication industries, including units involved in production or processing of edible oil and ghee, flour, marble, granite, soapstone, chromite, limestone, gemstones, pharmaceuticals, furniture, dairy products, fruits, olives, spices, herbal products, steel re-rolling, steel or aluminium fabrication and engineering products.

The exemption will not be available to an undertaking operating as a franchise, branch, subsidiary, division, satellite unit or other constituent establishment of a person having another industrial undertaking engaged in the same or substantially similar industrial activities in settled areas of the province or elsewhere in Pakistan.

The notification has taken effect from August 1, 2026 and will remain in force until June 30, 2028, unless withdrawn earlier.

It further clarified that no eligible industrial undertaking will be entitled to claim a refund or adjustment in respect of any tax deducted and deposited into the government treasury before commencement of the notification.

Copyright Business Recorder, 2026