Sales tax on rent a car invoices in Pakistan: SRB, PRA, KPRA and ICT

Sales tax on rent a car services in Pakistan is not one national tax. Since the 18th Amendment it has been a provincial levy, so the authority on your invoice depends on the supplier and the territory: the Sindh Revenue Board (SRB) in Sindh, the Punjab Revenue Authority (PRA) in Punjab, the Khyber Pakhtunkhwa Revenue Authority (KPRA) in KP, the Balochistan Revenue Authority (BRA) in Balochistan, and the Federal Board of Revenue (FBR) for the Islamabad Capital Territory. The starting question is not “where did we book?” but “from which registered office is this supplier providing the service, and where is the recipient?” The rate follows from that answer, and rates change with each provincial finance act. So this guide gives you the decision logic and the official document to check, not a rate table that will be out of date by the next budget.

For a finance team the practical outcome is simple. Get an invoice that names the supplier, shows their registration number, separates the tax from the hire charge and states the rate applied. Then check that registration against the relevant authority before anyone claims input tax.

Decision summary for finance teams

The table below maps each territory to its authority and to the source we actually checked for this article. Where we could not open a primary document, we say so rather than guess.

Two readings of that table matter. First, the heading 9819.3000 appears in both the ICT and KP documents, so the service is classified the same way even where the rate differs. Second, a rate you read in an old schedule is a lead, not an answer. KPRA itself lists amendments to its First and Second Schedules made in May 2026.

Why sales tax on rent a car services is provincial

Pakistan splits sales tax in two. Tax on goods is federal and administered by the FBR. After the 18th Amendment in 2010, the right to charge sales tax on services passed to the provinces, which set up their own revenue authorities to collect it. The overview of taxation in Pakistan lists SRB, PRA, KPRA and BRA as the provincial bodies.

Islamabad is the odd one out. It is not a province, so services there fall under a federal instrument, the Islamabad Capital Territory (Tax on Services) Ordinance, 2001. The FBR’s basics page names that ordinance as the governing law for services in ICT, and the FBR’s published text of the ICT ordinance applies the Sales Tax Act, 1990 to it with the necessary changes.

The consequence for anyone buying car hire across the country: five tax codes, five registration systems, five sets of schedules. A company with offices in Karachi, Lahore and Islamabad can easily receive invoices under three of them in a single month, sometimes from the same supplier group.

Which authority applies: where the service is rendered, not where it was booked

Booking location is close to irrelevant. A car ordered from a laptop in Manchester or a phone in Dubai is taxed by reference to where the supplier provides it from and, in some regimes, where the recipient is resident. The KP Act is the clearest public example of how a provincial law draws the line, and it is worth reading because the other regimes use broadly similar building blocks. Confirm the exact wording for Sindh, Punjab and Balochistan with their own texts.

Rule one: the supplier’s registered office

Section 3 of the Khyber Pakhtunkhwa Sales Tax on Services Act, 2022 (updated text) makes a service taxable when it is provided by a registered person “from his registered office or place of business in the Province, in the course of an economic activity”. Everything is taxable unless it is listed as exempt in the First Schedule. The Act also treats a business’s offices inside and outside KP as separate persons, which matters for national fleets with branches in several provinces.

Rule two: the resident recipient

The same section catches services provided by a resident or non-resident, in the course of an economic activity, to a person resident in the Province. Section 4 then puts the liability on the provider where the service comes from outside KP but the recipient is resident there. Section 29 goes further: an unregistered recipient of such a service is deemed registered for that tax period. In plain terms, a supplier cannot escape KP tax simply by invoicing from Islamabad.

Rule three: withholding by the buyer

Recipients registered as withholding agents must deduct a prescribed amount of tax on services received and pay it to the government. KPRA publishes a Sales Tax on Services Withholding Regulation, 2024 alongside an older Special Procedure (Withholding) Regulation, 2015. If your company is a withholding agent in any province, your accounts payable team, not the supplier, may owe part of the tax.

Three worked examples

These are illustrations of the reasoning, not rulings. Your adviser should confirm each against the current law.

• Example A. A Lahore-registered hire firm supplies a car and driver for a week of meetings in Lahore to a Lahore office. Supplier, service and recipient all sit in Punjab. PRA is the natural authority.
• Example B. An Islamabad-registered operator sends a car from Islamabad to meet a company’s KP-based team at Peshawar airport. The supplier is outside KP but the recipient is resident in KP, so the KP resident-recipient rule is in play. Read the UK FCDO travel advice for Pakistan first: it currently advises against all travel to Peshawar city.
• Example C. A Karachi-registered firm invoices a Karachi head office for a car that drives an employee to Hyderabad and back. The journey stays in Sindh. SRB is the obvious authority, and the question is only which rate and heading the supplier uses.

Province by province: what to check

Sindh: SRB sales tax rent a car invoices

The Sindh Revenue Board collects sales tax on services in Sindh. We could not open the SRB website to confirm the current rent-a-car entry for this article, so we are not quoting a Sindh rate. What to do instead: ask the supplier for their SRB registration number, the tariff heading they apply to the hire, and the rate printed on the invoice, then check the heading and rate against the SRB’s current schedule of taxable services. If the supplier prints no SRB number at all on a Karachi hire, that is your first question, not your last.

Punjab: PRA sales tax on services rent a car

The Punjab Revenue Authority administers the Punjab sales tax on services regime and runs STRIVE, its real-time sales tax invoice verification service, alongside registration and returns under its 2012 rules. For a finance team, STRIVE is the useful part: it lets you test whether an invoice from a Punjab supplier is known to PRA. We did not verify the current Punjab rent-a-car rate for this article, so confirm it with PRA’s current schedule or your tax adviser.

Khyber Pakhtunkhwa: KPRA rent a car tax

KP is where the documents are easiest to read. KPRA’s 2020-21 Second Schedule of rates lists “rent-a-car or rent-a-cab services” under heading 9819.3000 at five percent without input tax adjustment, with a note that providers pay the tax “regardless of the category of the vehicle”. The same schedule puts ride-hailing under a separate heading at two percent without input tax adjustment, and its default rate is fifteen percent. That schedule predates the 2022 Act and KPRA has since published schedule amendments, so treat those figures as history until you have checked the current version on the KPRA acts page.

Balochistan: BRA

The Balochistan Revenue Authority collects sales tax on services in the province. We could not reach the BRA website to confirm its current schedule, so ask for the supplier’s BRA registration and check the rate with BRA directly. Note too that the UK FCDO currently advises against all travel to the whole of Balochistan, so most foreign-staffed companies will rarely be buying car hire there.

Islamabad Capital Territory: FBR

For services in Islamabad, the FBR’s text of the ICT ordinance updated to 30 June 2023 lists “services provided in respect of rent a car” under PCT code 9819.3000 at fifteen percent, and gives fifteen percent as the general rate for most listed services. Budgets since then may have changed this. Check the latest consolidated ordinance on the FBR site before relying on it.

Cross-province journeys

This is where most confusion starts. An Islamabad to Lahore run starts in ICT and ends in Punjab. Which authority taxes it?

The laws do not tax the road. They tax the provision of a service, keyed to where the supplier provides it from and, under rules like KP’s, where the recipient is resident. The province the car happens to drive through is not the test. So a single intercity hire is usually invoiced under one regime, not split by kilometre.

What changes the answer is the supplier’s structure. If a national operator runs the job from its Lahore branch, the Punjab position is the natural reading. If it runs the same job from an Islamabad office, ICT rules come into view, unless a resident-recipient rule elsewhere pulls it back. KP’s Act treats a firm’s KP office and its offices outside KP as separate entities, which is exactly why branch-level invoicing matters.

A practical checklist for multi-leg bookings:

1. Ask which legal entity and which registered office will issue the invoice before the trip, not after it.
2. Ask which authority’s registration number will be printed on it.
3. For a return trip, confirm both legs come from the same office. A different branch for the return leg can mean a different authority.
4. If your company is registered as a withholding agent in the recipient’s province, tell the supplier in writing so neither side pays twice.
5. Keep the booking confirmation with the invoice. It records the pickup, drop-off and dates your auditor will want to match.

For the journeys themselves, our city-to-city car service across Pakistan sets out how one-way and return intercity trips are quoted, which helps when you are forecasting spend by route.

What a compliant invoice shows: the NTN invoice for car hire

The KP Act’s section 34 is a good template for what a sales tax invoice must contain, and it lines up with what auditors expect elsewhere. A registered supplier’s invoice should show:

• the supplier’s name, address and sales tax registration number;
• a description of the service, for example “car with driver, 3 days, Islamabad” rather than “transport”;
• the value exclusive of tax;
• the rate of tax applied;
• the amount of tax;
• the value inclusive of tax.

Corporate buyers often also ask for an NTN invoice for car hire, meaning an invoice that carries the supplier’s National Tax Number as well. The NTN identifies the business for federal income tax; the provincial registration identifies it for sales tax on services. They are different numbers, and a supplier can hold one without the other. If an invoice shows an NTN and no provincial registration, you have evidence of a registered business, but not evidence that it is registered to charge the tax it has added.

Also check the date. KP only lets you deduct input tax on an invoice not older than six tax periods, so an invoice that turns up months after the trip can quietly cost you the claim.

Claiming input tax as a registered business

Input tax is the tax a registered person has paid on the taxable goods and services it buys. Whether you can offset the tax on a car hire invoice depends on your own registration and on what the car was used for. Under sections 16 and 17 of the KP Act:

• you need a true and valid tax invoice not older than six tax periods;
• the service must be used exclusively in connection with the taxable services you provide;
• payments above fifty thousand rupees must be made by crossed cheque, bank draft, pay order or another banking instrument, or the adjustment is barred;
• section 17 bars input tax on a list of items that includes vehicles and their parts, entertainment, food and gifts, and employee uniforms, as well as fake invoices and tax not deposited in the treasury.

That last point deserves care. Whether a hired car and driver falls inside the “vehicles” bar, which refers to vehicles themselves rather than a service, is a question for your tax adviser, not a supplier’s sales team. Reduced-rate regimes can also exclude input tax entirely: KP’s 2020-21 rent-a-car and ride-hailing entries both say so outright, and several ICT entries on its reduced-rate table carry the same restriction.

Before any claim, confirm the supplier is live. The FBR’s Active Taxpayer List (ST) is the federal record of active sales tax return filers. PRA’s STRIVE service does a similar job for Punjab invoices; ask SRB, KPRA and BRA how they want their registrations verified.

Checking current rates at the source

Service tax rates in Pakistan move with each provincial budget and finance act. A procurement team that keeps a static rate table in a spreadsheet is likely to be wrong sooner or later. A better routine:

1. Identify the regime from the invoice. The registration number printed tells you which authority the supplier believes applies.
2. Find the heading. Rent-a-car sits under 9819.3000 in both the ICT and KP texts. Ask the supplier which heading they use if it is not printed.
3. Open the current schedule. Use the authority’s own consolidated act or latest finance act, not a blog summary. KPRA’s acts page lists the 2022 Act updated for the 2026 finance act; FBR publishes the consolidated ICT ordinance.
4. Check the conditions column. A lower rate often comes with “without input tax adjustment”. That changes your net cost more than the headline rate.
5. Record the date you checked. Store the PDF with the invoice batch. When the auditor asks why you accepted a rate, you can show the document in force on that date.

Buying car hire through iDrive: what to ask at quote stage

iDrive is a booking platform that works with independent drivers and hire suppliers across Pakistan. That structure matters for tax: the supplier that provides the car, the entity that issues the invoice and the registration it carries all need confirming for your particular booking. We do not quote tax treatment in advance, and a quote is not a confirmed booking until it has been accepted and a vehicle assigned.

When you request a car rental in Pakistan with a named driver or self-drive, put these in the request:

• your company’s legal name, address and NTN, exactly as they should appear;
• whether you need a provincial sales tax invoice, and for which province;
• whether you are a registered withholding agent anywhere;
• your purchase order number and cost centre;
• whether you want one invoice per trip or a monthly statement.

For recurring staff movements, start with our business travel car service for companies. The hire itself is governed by our terms of hire, which you should read alongside any supplier invoice terms. If your team books family or guest travel as well, our sister service Pakistan Taxi’s car and driver hire, part of the iDrive network, handles those planning enquiries separately. When you are ready, send the journey details for a quote.

Questions people ask

Is sales tax on rent a car services the same in every province?

No. Each province sets its own rate and conditions, and Islamabad follows the federal ICT ordinance. KP’s 2020-21 schedule showed five percent for rent-a-car, without input tax adjustment, while FBR’s 2023 ICT text showed fifteen percent. Check the current schedule each time.

Does it matter where we booked the car?

Rarely. The tests are where the supplier provides the service from and, in regimes like KP’s, where the recipient is resident. A booking made from abroad does not change the authority.

Is an NTN on the invoice enough to claim input tax?

No. The NTN is a federal income tax number. To claim input tax you need a valid sales tax invoice showing the supplier’s provincial or ICT registration, the rate and the tax amount, and the claim must meet your own regime’s conditions.

Which authority taxes an Islamabad to Lahore hire?

Usually the one where the supplier’s providing office is registered, subject to any resident-recipient rule. The route through Punjab does not split the tax by distance. Ask the supplier which office will invoice before the trip.