The Federal Board of Revenue (FBR) is expected to broaden the scope of sales tax on services within the Islamabad Capital Territory (ICT) in the upcoming federal budget for the fiscal year 2025-26.
Sources indicate that one of the major changes under consideration includes the introduction of a 4% sales tax on ride-hailing services (cab aggregators) operating in the federal capital. This measure is aligned with FBR’s ongoing efforts to bring digital and service-based platforms into the formal tax net.
Currently, provincial revenue authorities such as PRA, SRB, and KPRA are charging a 5% sales tax on ride-hailing services in their respective jurisdictions. The proposed 4% tax by FBR would align Islamabad’s treatment of such services with those prevailing in the provinces, while providing a slight competitive advantage in rate.
FBR is already levying 15% sales tax under the Islamabad Capital Territory (Tax on Services) Ordinance, 2001 on a broad array of services, including:
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Hotels, motels, guest houses, farmhouses
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Marriage halls, lawns, clubs, and caterers
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Information technology (IT) and IT-enabled services
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Other professional, business, and support services
The proposed tax on ride-hailing services is likely to be part of a broader initiative to enhance revenue collection from the rapidly growing digital economy. In addition, the FBR is also reviewing changes to the withholding tax regime, particularly focused on increasing withholding tax rates on e-commerce platforms.
These proposals are expected to be finalized and announced in the federal budget for 2025-26, aimed at improving documentation, increasing tax compliance, and expanding the tax base in the service sector, especially within the ICT region.
