KP keeps sales tax on services unchanged at 15% in budget FY26

June, 17 2025 (MLN): The standard rate of sales tax on services in Khyber Pakhtunkhwa (KP) will remain unchanged at 15%, as per the KP Finance Bill 2025 presented in the Provincial Assembly.

The legislation proposes a significant simplification by replacing the existing positive list system with a negative list framework.

Under this change, all services provided in the province will be considered taxable unless specifically exempted.

In addition to this structural change, the bill also proposes a reduction in the stamp duty rate on allotment orders or transfers of allotment orders, from the current 2% to 1%.

The revised rate will apply to the plot’s value as per the higher of the Federal Board of Revenue (FBR) Valuation Table or the Deputy Commissioner’s rate.

Furthermore, the due date for advance payment of tax on urban immovable property, in order to avail the 20% rebate, is proposed to be extended from July 31 to September 30.

The KP government has proposed significant revisions to royalty rates on various minerals used by the cement industry.

According to the bill, the royalty rates on several key minerals will see a phased enhancement starting from the fiscal year 2025-26 and continuing annually until 2030-31.

The minerals affected include Gypsum, Limestone, Laterite, Marl, Sandstone, Silica Sand, Slate Stone, and Shale Clay—all essential raw materials for cement manufacturing.

Gypsum (Cement Factory), previously unlisted, will now be taxed starting at Rs350 per ton in 2025-26, increasing incrementally to Rs527 per ton by 2030-31.

Limestone, with an existing rate of Rs250 per ton, will rise to Rs527 per ton over six years.

Laterite, currently at Rs200 per ton, will follow the same enhancement schedule.

Marl and Sandstone, both previously not subject to royalty, will now match the revised rates starting at Rs350 per ton in 2025-26. Silica Sand, currently at Rs300 per ton, will increase to Rs527 per ton.

Slate Stone and Shale Clay, both currently at Rs250 per ton, will also see their rates more than double by 2030-31.

The annual enhancement follows a consistent trajectory: Rs350 (2025-26), Rs385 (2026-27), Rs424 (2027-28), Rs456 (2028-29), Rs490 (2029-30), and Rs527 (2030-31).