A Guide to Tax Rates in Khyber Pakhtunkhwa (KPRA)

Attention all hotels, restaurants, hostels, and caterers in Khyber Pakhtunkhwa! The KPRA has announced new tax rates and exemptions for your businesses, effective immediately. Here’s what you need to know:

Standard Rate:

  • Previously, all businesses in this category were taxed at 15%.

Exemptions & Reduced Rates:

  • Hostels:
    • Student hostels are fully exempt.
    • Others are taxed at 5% without input tax adjustment.
  • Non-corporate local hotels, guest houses, and lodges:
    • 8% without input tax adjustment.
    • If using RIMS (Restaurant Invoice Management System), the rate reduces to 5% without input tax adjustment.
    • Traditional “dhaba” style restaurants: 1% without input tax adjustment.
  • Traditional accommodation (sarrayas, inns):
    • 1% without input tax adjustment (if charges per bed are less than Rs. 300).
  • Marriage halls, pandals, shamianas (including food services):
    • 8% without input tax adjustment.
  • Caterers:
    • 10% without input tax adjustment.

Take Away & Delivery:

  • These services are included in the above categories, regardless of being offered separately or as part of the main business.


  • Sales tax remains payable on a monthly basis.


  • These rates offer significant tax relief for various sectors within the hospitality and food industry.
  • They encourage formalization and transparency by promoting the use of RIMS.

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