Do lawyers, accountants, architects, engineers and consultants in Islamabad charge sales tax on their services?

In Islamabad, sales tax on services is a federal levy under the Islamabad Capital Territory (Tax on Services) Ordinance, 2001, not a provincial one. The Ordinance charges tax on the services listed in its Schedule, and the list includes most professional firms.

What does the law say?

Section 3(1): the charge. Sales tax is charged “at rates specified in column (4) of Table-1 of the Schedule” on “the value of the taxable services rendered or provided in the Islamabad Capital Territory”. A proviso says services in Table-2 are charged at the rates and on the conditions printed in Table-2.

Section 1(2): extent. The Ordinance extends to the whole of Islamabad Capital Territory.

Table-1: the professional entries. The Schedule as amended to 30 June 2025 lists these entries, each with the rate printed in column (4):

Serial	Service (as described in Table-1)	Rate
9	Management consultancy services	Fifteen percent
12	Services provided by technical, scientific and engineering consultants	Fifteen percent
13	Services provided by other consultants including but not limited to human resource and personnel development services; market research services and credit rating services	Fifteen percent
21	Services provided by architects, town planners and interior decorators	Fifteen percent
47	Services provided or rendered by legal practitioners and consultants	Fifteen percent
48	Services provided by accountants and auditors	Fifteen percent
51	Services provided or rendered by corporate law consultants	Fifteen percent

Table-2: software consultants. Serial number 11 of Table-2 lists services provided by software or IT-based system development consultants at five percent, “subject to the conditions that no input tax adjustment or refund shall be admissible”.

Section 3(1A): exports. Export of services is charged at zero per cent.

Section 3(3): Sales Tax Act machinery. The provisions of the Sales Tax Act, 1990, and rules and notifications under it, apply to this tax for manner, time and mode of payment, registration and de-registration, records and audit, enforcement, penalties and allied matters.

Sales Tax Act section 14: registration. Section 14(1)(f) requires registration by a person who is required under any other Federal law to be registered for a tax collected or paid as if it were a levy of sales tax. Section 3(2) of the ICT Ordinance charges this tax in the same manner as sales tax under the Sales Tax Act.

How does it work in practice?

1. Identify whether the service is rendered or provided in Islamabad Capital Territory.
2. Find the matching Table-1 or Table-2 entry.
3. Apply the rate in column (4) to the value of the service.
4. Registration, payment and returns follow the Sales Tax Act, 1990 machinery applied by section 3(3).

A further proviso to section 3(1), added by the Finance Act, 2025, lets the Board require service providers in Table-1 and Table-2 to integrate with its computerised system for real-time reporting, from a date and in a manner set by general order. No such order is held in this corpus.

Worked example (illustrative figures)

The fee is invented. The rate is from serial number 47 of Table-1.

A law chamber in Islamabad’s Blue Area bills a client Rs. 400,000 for drafting and vetting a commercial lease. Assume the fee is the value of the service.

1. Rate for legal practitioners: fifteen percent.
2. Tax: 15% of Rs. 400,000 = Rs. 60,000.
3. Total charged to the client: Rs. 400,000 + Rs. 60,000 = Rs. 460,000.

If the same chamber advised a client abroad on a matter that counts as an export of services, section 3(1A) sets the rate at zero per cent.

What if …?

What if my office is in Rawalpindi but the client is in Islamabad? Section 3(1) looks at services “rendered or provided in the Islamabad Capital Territory”. The Ordinance text held here does not set out detailed place of supply rules for services that cross the ICT boundary. The law is unclear on this in the corpus, and provincial laws that may also claim the service are outside it.

What if my consultancy fits two entries? For example, an engineering firm doing management advice could fit serial 9 or serial 12. Both are fifteen percent, so the rate is the same, but the Ordinance does not set a rule for choosing an entry.

What if I am a software consultant? Table-2 serial 11 prints five percent with no input tax adjustment or refund. Table-1 serial 11 also lists IT services at fifteen percent. The proviso to section 3(1) sends Table-2 services to Table-2 rates. Which entry a given engagement falls under is a question of fact the text does not resolve.

Common mistakes

• Assuming professionals are outside sales tax. Table-1 names legal practitioners, accountants, auditors, architects and consultants.
• Using provincial rates in Islamabad. ICT services are taxed under the federal ICT Ordinance, not provincial laws.
• Looking for a small-firm exemption. None is printed in these entries.
• Confusing this with income tax withholding on fees. Sales tax under the ICT Ordinance is separate from income tax deducted from professional fees under the Income Tax Ordinance.

What to check in the official text

Read section 3 and Table-1 and Table-2 of the Schedule in the official PDF of the ICT Ordinance amended to 30 June 2025, and section 14 of the Sales Tax Act, 1990. Section 3(4) lets the Board specify a Negative List of exempt services in Table-3 by notification; no Table-3 is printed in the edition held here. Check for any such notification, and for any general order on real-time integration.