The Khyber Pakhtunkhwa government has exempted eligible local service providers from the former Federally Administered Tribal Areas (FATA) and Provincially Administered Tribal Areas (PATA) from sales tax, according to the Khyber Pakhtunkhwa Revenue Authority (KPRA).

Under the notification, a service provider must be a permanent resident of former FATA or PATA to qualify for the exemption. The business must also be established and regularly operated within the former tribal areas.

KPRA said the services must originate and be completed entirely within former FATA or PATA. The exemption will apply only to services provided within these areas.

The exempted services include hotels, guest houses, lodges, restaurants, cafes and other food services. Marriage halls, clubs and similar recreational and community establishments will also qualify.

Real estate services involving the sale and purchase, rent or lease of property have also been included in the exemption. Construction-related services, including electrical, mechanical, plumbing, flooring, plastering and painting, will also be exempt.

Services provided by private hospitals, doctors, clinics and medical diagnostic laboratories will be covered, along with intra-city passenger and goods transportation services operating within the respective areas.

The exemption also covers beauty parlours, barbers, salons and other personal care services, as well as vehicle repair and maintenance, car washing, laundry and dry-cleaning services.

Repair and installation of industrial, mechanical, electrical and electronic equipment, along with electrical, plumbing, welding, fabrication and other technical services, will also be exempt from sales tax.

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Photography, videography, event management, exhibitions and conventions are included, as are consultancy and professional services provided by local experts and professionals. 

Travel agents, tour operators and certain intermediary services related to the distribution of goods will also qualify.

However, KPRA clarified that telecommunications services, government-funded projects, PSDP and ADP projects will not be covered by the exemption. Service providers operating as franchises, branches, subsidiaries or divisions will also be excluded.

The exemption will not apply to sales-taxable services covered under contracts that were already agreed upon before the notification.

According to KPRA, the sales tax exemption came into effect on August 1, 2026, and will remain valid until June 30, 2027.

Eligible service providers meeting all the prescribed conditions will not be required to charge or pay sales tax on the exempted services.