What is the tax rate on catering services in Islamabad?

Catering in Islamabad appears in two places in the Schedule to the Islamabad Capital Territory (Tax on Services) Ordinance, 2001, with two different rates. Table-1 lists caterers at fifteen per cent. Table-2 lists caterers at five per cent with no input tax adjustment or refund. The text of the Ordinance does not say in so many words how the two entries fit together, and this page sets out both rather than picking one.

What does the law say?

Section 3(1) is the charging provision. It charges sales tax on the value of taxable services rendered or provided in the Islamabad Capital Territory at the rates in column (4) of Table-1. Its first proviso adds that “the services specified in Table-2 of the Schedule shall be charged to tax at such rates and subject to such conditions and limitations as specified therein”.

The two entries that mention caterers are:

Where	Services described	Rate
Table-1, serial 1(i), PCT heading 98.01	Services provided or rendered by hotels, motels, guest houses, farmhouses, marriage halls, lawns, clubs and caterers	Fifteen per cent
Table-2, serial 10, respective headings	Services provided or rendered by marriage halls and lawns, by whatever name called, including “pandal” and “shamiana” services and caterers	Five per cent, subject to the condition that no input tax adjustment or refund shall be admissible

The footnotes in the official text record that Table-2 was inserted by the Finance (Supplementary) Act, 2022, and that serial 1 of Table-1 and its entries were substituted by the Finance Act, 2023. The edition used here is amended to 30 June 2025.

Why is this unclear?

Marriage halls, lawns and caterers are named in both tables. The proviso to section 3(1) tells the reader that Table-2 services are charged at Table-2 rates and conditions. At the same time, serial 1(i) of Table-1 still names the same businesses at fifteen per cent, and nothing in the Schedule says that serial 1(i) is subject to serial 10 of Table-2, or that the five per cent rate is optional. The Ordinance does not settle whether the two entries are meant to apply to different situations, or whether one displaces the other.

This site reports what the text says. It does not resolve the overlap, and it does not rely on how the rates are applied in practice.

Does the card rate help a caterer?

No. The five per cent rate for payment by debit or credit card, mobile wallet or QR scanning is written into serial 1(ii) of Table-1, which covers restaurants, cafes, coffee shops, food huts and similar food outlets. Neither serial 1(i) nor serial 10 of Table-2 makes the rate depend on how the customer pays.

Worked example (illustrative figures)

A caterer in Islamabad serves a walima for 300 guests at a lawn in E-11. The catering bill before tax is Rs. 600,000. The amount is invented; the rates are the two in the Schedule.

Under Table-1, serial 1(i):

1. Value of the service: Rs. 600,000
2. Tax at fifteen per cent: 600,000 x 15 / 100 = Rs. 90,000
3. Total: Rs. 690,000

Under Table-2, serial 10:

1. Value of the service: Rs. 600,000
2. Tax at five per cent: 600,000 x 5 / 100 = Rs. 30,000
3. Total: Rs. 630,000
4. Condition: the caterer cannot adjust or claim a refund of input tax against this supply.

The gap between the two readings is Rs. 60,000 on this one event. The Ordinance text alone does not tell you which figure is right.

What if the event is held at a marriage hall?

Two different taxes can then touch the same function. The sales tax on services described above is one. The other is advance income tax under section 236CB of the Income Tax Ordinance, 2001, which the owner, lessee, operator or manager of the marriage hall, marquee, hotel, restaurant, lawn or club collects from the person holding the function. Section 236CB(2) extends that collection to food, service or any other facility provided by another person, so an outside caterer’s bill is included. The separate page on section 236CB explains the rate.

What if the caterer works outside Islamabad?

The Ordinance applies to services rendered or provided in the Islamabad Capital Territory. Catering in Rawalpindi, Lahore or any other provincial city is taxed under provincial sales tax laws, which are outside this site’s corpus.

Common mistakes

• “Caterers always pay five per cent in Islamabad.” Table-2, serial 10 says five per cent, but Table-1, serial 1(i) still names caterers at fifteen per cent. Both are in the text.
• “The five per cent rate still allows input tax.” Serial 10 of Table-2 applies subject to the condition that no input tax adjustment or refund is admissible.
• “Sales tax on the hall covers the income tax too.” The advance income tax under section 236CB is a separate levy under a different law.

What to check in the official text

Read section 3(1) and its first proviso, serial 1 of Table-1 and serial 10 of Table-2 of the Schedule, in the edition amended to 30 June 2025. Check whether any Finance Act after that date, or any notification by the Board, has addressed the overlap between the two entries. Such notifications are not part of this corpus.