Architecture services play a vital role in shaping Pakistan’s urban development, construction industry, and infrastructure planning. From residential housing schemes to commercial complexes and public infrastructure projects, architects contribute at every stage of development. As the demand for architectural innovation grows, so does the need for tax compliance among service providers. Architecture services are subject to various federal and provincial taxes in Pakistan. This article provides a complete 2025 guide to understanding how architecture services are taxed in Pakistan, including income tax, sales tax on services, withholding tax, and other regulatory obligations.
Definition of Architecture Services
Architecture services encompass a broad range of professional activities related to planning, designing, and overseeing the construction of buildings and spaces. These services typically include:
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Concept design and architectural drawings
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Site analysis and planning
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3D modeling and visualization
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Construction supervision and project management
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Interior design and landscape architecture
In the context of taxation, these services are classified under “professional services” or “consultancy services,” making them subject to service-based tax regimes at both federal and provincial levels.
Income Tax on Architects and Architecture Firms
Registration with FBR
Every architect, whether practicing individually or through a firm or company, must register with the Federal Board of Revenue (FBR) to obtain a National Tax Number (NTN). The NTN is mandatory for filing returns, issuing tax-compliant invoices, and participating in public projects.
Income Tax Rates for Individuals and Firms
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Individual Architects or Sole Proprietors: Taxed based on slab rates for salaried or non-salaried individuals as per the Income Tax Ordinance, 2001.
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Architecture Firms or AOPs (Association of Persons): Income is taxed at 29% in 2025 (subject to final tax or normal tax regime depending on nature of income).
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Private Limited Architecture Companies: Taxed at 29% corporate tax rate under the normal tax regime.
Firms must file annual income tax returns, wealth statements (for individuals), and audited accounts (if required) to remain compliant.
Minimum Tax on Turnover
If the architecture firm declares a loss or low profitability, a minimum tax of 1.25% on turnover may apply under Section 113 of the Income Tax Ordinance, 2001, unless exempted or falling under a special regime.
Sales Tax on Architecture Services
Provincial Jurisdiction and Tax Rates
Sales tax on services in Pakistan is levied at the provincial level, and each province has its own Revenue Authority and Sales Tax on Services Act. Architecture services are taxable services in all major provinces, including:
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Punjab Revenue Authority (PRA) – Punjab Sales Tax on Services Act, 2012
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Sindh Revenue Board (SRB) – Sindh Sales Tax on Services Act, 2011
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Khyber Pakhtunkhwa Revenue Authority (KPRA) – KP Finance Act, 2013
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Balochistan Revenue Authority (BRA) – BRA Sales Tax on Services Act, 2015
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ICT / Federal Territory – Capital Territory follows ICT (Tax on Services) Ordinance, 2001, administered by FBR
The standard sales tax rate on architecture services ranges between 13% and 16%, depending on the province. For example:
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Punjab (PRA): 16%
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Sindh (SRB): 13%
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KP (KPRA): 15%
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Balochistan (BRA): 15%
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ICT: 15%
Mandatory Registration with Revenue Authorities
Architects and firms must register with the relevant provincial revenue authority based on the place of business or service delivery. Upon registration, a Sales Tax Registration Number (STRN) is issued. Registered service providers are obligated to:
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File monthly or quarterly sales tax returns
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Issue sales tax invoices
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Collect and deposit sales tax from clients
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Maintain proper sales tax records for audit purposes
Withholding Tax on Architecture Services
Section 153(1)(b) of the Income Tax Ordinance, 2001
Payments made to architects by companies, government institutions, and other withholding agents are subject to withholding tax under Section 153(1)(b). As of 2025:
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Resident architects (individuals or firms): Withholding tax at 10% of gross amount (adjustable)
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Companies: Also subject to minimum tax or advance tax under section 147
If the architect or firm appears in the Active Taxpayers List (ATL), the tax rate is reduced. Non-ATL providers may face higher withholding (up to 100% increase).
Provincial Withholding Requirements
Some provincial authorities (especially SRB and PRA) require registered businesses to withhold sales tax on services received from unregistered service providers. This makes it important for architecture firms to maintain proper registration to avoid dual taxation or deduction at source.
Tax Exemptions and Special Provisions
Zero-Rating and Exemptions
Architecture services are generally not zero-rated under the Sales Tax on Services Acts. However, in government-funded public sector projects, there may be exemptions or reduced tax rates if granted by notification.
Export of Services
If architecture services are rendered to foreign clients, some provinces offer zero-rating or reduced tax rates on export of services. Firms need to prove that the service was consumed outside Pakistan (e.g., offshore designs, foreign contracts). Export-related exemptions require:
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Proof of foreign remittance through banking channels
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Service agreement with foreign client
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Sales tax registration and compliance
Small Business Thresholds and Simplified Schemes
Certain provinces offer simplified compliance or exemption thresholds for small service providers. For example, Punjab may exempt those with annual revenue under Rs. 2.5 million. However, such providers cannot issue tax invoices and cannot claim input adjustments.
Invoicing and Record Keeping Requirements
Sales Tax Invoicing
All registered architects and architecture firms must issue computer-generated tax invoices that include:
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STRN
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NTN
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Invoice number and date
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Description of service
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Sales tax charged
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Total amount
Invoices must be issued within seven days of service completion and recorded for five years for tax audit purposes.
Books and Accounts
Firms are required to maintain:
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Sales register and purchase register
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Bank statements and cash ledgers
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Client contracts and project files
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Payroll records (if applicable)
Failure to maintain or produce such records can result in fines and disallowance of expenses or input tax.
Filing Obligations and Deadlines
Income Tax Filing
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Individuals and AOPs: File annual returns by September 30
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Companies: File within six months of financial year-end
Returns must be filed electronically through FBR’s IRIS portal.
Sales Tax Filing
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Monthly Filing: Most revenue authorities require monthly sales tax returns by the 15th or 18th of the following month
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E-payment: Tax must be paid electronically before return submission
Penalties apply for late filing, incorrect return submission, or under-reporting.
Penalties for Non-Compliance
Income Tax
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Late filing penalty: Rs. 2,500 per day (maximum Rs. 50,000)
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Failure to deduct/withhold tax: Subject to default surcharge and penalty
Sales Tax on Services
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Late return filing: Rs. 5,000 or higher per return
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Non-registration: May attract compulsory registration and penalties
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False invoices or tax fraud: Up to 100% of tax evaded + criminal prosecution
Audit and Enforcement
Architecture firms may be selected for tax audit under both income and sales tax laws. The audit can cover:
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Revenue reconciliation
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Input tax verifications
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Withholding obligations
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Third-party cross-matching
Proper documentation and timely compliance can reduce audit risk and potential assessments.
Tips for Architecture Firms to Stay Tax Compliant
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Register with FBR and provincial authorities as soon as services commence
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Maintain separate NTN and STRN for individual and firm-level operations
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File returns regularly, even if no income or service is earned during the period
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Issue valid tax invoices and collect applicable sales tax
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Respond to notices or audit letters within prescribed timelines
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Hire a qualified tax consultant or accountant to manage compliance
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Keep your name in the ATL list to benefit from reduced tax rates
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Avoid dealing in cash for large transactions to ensure audit traceability
Conclusion
Architecture services in Pakistan fall under the scope of both federal and provincial tax regulations, making tax compliance a critical part of business operations. From registration to invoicing, tax returns, and audits—every architecture firm must maintain financial discipline and meet its obligations under the Income Tax Ordinance, Sales Tax on Services Acts, and provincial rules. Understanding applicable tax rates, exemptions, and compliance requirements can help architecture firms avoid penalties and build trust with clients, government bodies, and financial institutions. By embracing professional tax practices and digital recordkeeping, architecture firms can align themselves with Pakistan’s evolving taxation landscape and contribute to formal economic growth.
