Punjab sales tax on services: rates and how PRA invoicing works

Punjab charges sales tax on services separately from the federal sales tax on goods. The Punjab Revenue Authority (PRA) sets the rates and collects the tax under the Punjab Sales Tax on Services Act 2012. If you run a service business in Punjab, here is what you charge and how PRA sees each invoice.

The standard rate

The general PRA rate on services is 16 percent. This applies to most taxable services in Punjab that do not have a specific reduced rate of their own, including restaurants and many other outlets. When you issue an invoice, this is the rate that usually applies to the service value.

The card payment rate for restaurants

Restaurants have a rule worth knowing. Payments made by debit or credit card at a restaurant are charged a reduced Punjab sales tax rate, set at 8 percent, rather than the standard 16 percent. The lower rate is meant to encourage documented, card-based payments. In practice it means your invoicing needs to apply the correct rate based on how the customer pays, so cash and card sales can carry different tax on the same menu item.

This is exactly the kind of detail that gets missed with manual billing and handled automatically by connected software, which applies the right rate and reports the sale to PRA in one step.

Who has to register and report

Service providers in Punjab that fall under the Act register with PRA and, once past the turnover threshold, report their invoices electronically. Restaurants make up the largest group brought into PRA's monitoring so far, followed by salons, caterers and similar businesses. Registration uses your business details and gives you a PRA registration number that identifies you on every invoice.

How the invoice reaches PRA

With digital invoicing, the sale does not wait for your monthly return. Your connected system sends each invoice to PRA at the time of sale, PRA records it, and the printed receipt carries a QR code the customer can scan. For you, the steps are the same as any sale. The reporting happens underneath. The value of a proper system is that it stores your services with the right rate, applies the card rule for restaurants, and keeps a clean record you can reconcile at return time.

Keeping rates correct

Rates and rules change with Punjab's budget and PRA notifications, so treat any figure as current-at-time-of-reading and confirm the specific rate for your service. What does not change often is the shape of the system: a standard rate for most services, a reduced card rate for restaurants, registration with PRA, and real-time reporting of invoices.

General information, not tax advice. Confirm current rates with the Punjab Revenue Authority or your consultant.