New Service Tax Rates 2025: A Guide for Businesses

Here are the  tax rates for various services for Tax Year 2025, impacting businesses across diverse sectors. This article provides a comprehensive breakdown of these changes, highlighting categories with lower tax rates and emphasizing relevant services you might utilize.

Focus on Services:

The new tax regime applies to a wide range of services, including:

  • Transportation and Logistics: This encompasses services offered by businesses in transport, freight forwarding, air cargo, courier, and warehousing.
  • Human Resources: Manpower outsourcing services fall under this category.
  • Hospitality and Security: Hotels and security guard services are also included.
  • Technology and Communication: Software development, tracking services, and telecommunication infrastructure (tower) services are covered.
  • Financial Services: Share Registrar services, asset management companies, and collateral management services are encompassed.
  • Professional Services: Engineering services, data services, inspection, certification testing and training services are included.
  • Other Services: Car rental, building maintenance, services by the Pakistan Stock Exchange and Mercantile Exchange, travel and tour services, and oilfield services are also subject to these tax rates.
  • Lower Service Tax Rates:

    For services  mentioned above, the general tax rates are:

    • Filers: 4%
    • Non-filers: 8%

Reduced Tax Rates for Certain Services:

Here’s a breakdown of categories with lower tax rates for filers:

  • Export-Oriented Services: Stitching, dyeing, printing, embroidery, washing, sizing, and weaving services rendered to exporters or export houses benefit from a 1% tax rate for filers.
  • Agricultural Products: The sale of rice, cottonseed, and edible oil enjoys a 1.5% tax rate for filers.
  • Media Advertising: Electronic and print media advertising services offered by companies, individuals, or associations of persons (AOPs) have a 1.5% tax rate for filers.

Withholding Tax Rates for Goods:

Separate tax rates apply to the sale of goods:

  • Companies: Filers pay 5% tax, while non-filers pay 10%.
  • Individuals/AOPs: Filers pay 5.5% tax, while non-filers pay 11%.

Simply Put:

Filing your taxes is crucial. Businesses can benefit from significantly lower tax rates across various services, including transportation, logistics, technology, and professional services. Staying informed about these changes and consulting with a tax professional can help ensure compliance and optimize your tax obligations.

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