Tax Policies
1 min read
Understanding Further Tax in Pakistan: When and How It Applies
A detailed explanation of Further Tax provisions in Pakistani tax law, including rates, exemptions, and calculation methods.
AH
Ahmed Raza
March 12, 2026
What is Further Tax?
Further Tax is an additional sales tax levied on supplies made to unregistered persons under Section 3(1A) of the Sales Tax Act, 1990. It aims to encourage businesses to deal with registered taxpayers.
Current Further Tax Rate
The standard Further Tax rate is 3% of the value of taxable supplies made to unregistered persons.
When Does Further Tax Apply?
- Sales to buyers without valid NTN/STRN
- Sales to unregistered persons
- Sales where buyer registration cannot be verified
Exemptions from Further Tax
Further Tax does not apply to:
- Exports
- Supplies to registered persons
- Zero-rated supplies
- Exempt supplies
- Supplies under specific SROs
Calculation Example
| Description | Amount |
|---|---|
| Taxable Value | Rs. 100,000 |
| Sales Tax @ 18% | Rs. 18,000 |
| Further Tax @ 3% | Rs. 3,000 |
| Total Invoice | Rs. 121,000 |
Impact on Business
- Increased cost for unregistered buyers
- Incentive to verify buyer registration
- Additional compliance burden
- Potential competitive disadvantage
Best Practices
- Always verify buyer NTN before invoicing
- Maintain records of verification attempts
- Update customer database regularly
- Consider offering registration assistance to regular buyers
