PESHAWAR: Khyber Pakhtunkhwa Revenue Authority (KPRA) has registered a growth of 27.3% in collection of Sales Tax (GST) on Services as compared to last fiscal year while Infrastructure Development Cess increased by 115%.
By the end of the year, total collections by KPRA are expected to reach PKR 50.7 billion. In the first 10 months of FY 2024–25 (July to April), KPRA collected PKR 42.1 billion, showing strong performance, said a white paper on the budget for financial year 2025-26.
The Khyber Pakhtunkhwa Revenue Authority (KPRA) was set up under the KP Finance Act, 2013 as an independent body to collect Sales Tax on Services and other provincial taxes. Over the years, KPRA has become an important institution on helping the province increase its own source revenues (OSR), bring more services under the tax net, and support better delivery of public services. This year, KPRA also expanded its tax base through the KP Finance Act, 2024. New sectors were added like healthcare, passenger transport, health insurance, and digital services. Tax rates were increased for restaurants and wedding halls, and the Cess rate was doubled and applied to exports and transit trade. These steps have helped improve collections and brought KPRA in line with modern tax practices.
The following table highlights KPRA’s revenue performance over recent fiscal years: Collection in FY 2023-24 is exclusive of the reimbursement of an amount of Rs. 4.1Bn received to the province from FBR on account of Cross Input Tax Adjustment. In the current FY no amount has been reimbursed from FBR.
In FY 2024-25 (Jul-Apr), KPRA achieved a remarkable 27.3% growth in Sales Tax on Services (STS) collections and a 115% increase in Infrastructure Development Cess (IDC) reflect KPRA’s concerted efforts in expanding the tax base, strengthening compliance, and implementing targeted enforcement measures. Tax Reforms and Sectoral Expansions As part of its reform agenda, KPRA introduced new taxable service sectors through the KP Finance Act, 2024, incorporated into the Second Schedule of the KP STS Act, 2022.
These sectors and their revenue contributions include: Rationalizing tax rates for wedding halls – (Total Growth 40%) Increasing tax rate on Restaurants to 6% – (Total Growth 21%) Health Care Services – 30 Million Additional Digital Initiatives Transition from traditional return filing to the IRIS system, with the adoption of a Single Sales Tax Return (SSTR) for sectors like Oil & Gas and Microfinance Banks.
Deploying the Restaurant Invoice Management System (RIMS) to enhance tax administration efficiency. Leveraging the existing provisions within the KP STS Act to encourage reporting of tax evasion, fostering a culture of accountability. Leveraging social media platforms to conduct awareness sessions, educating taxpayers on compliance requirements and benefits. Sourcing data from statutory bodies such as SECP, NADRA, and PTA to improve taxpayer identification and compliance monitoring. Implementing a Risk-Based Audit and focus on high-risk areas. Finalizing an MoU with the FBR and other provinces for data sharing, despite ongoing deliberations over discrepancies in the draft agreement. Consensus is expected soon, enabling seamless collaboration and enhanced revenue oversight.
KPRA aims to invest in capacity building for its workforce, equipping them with advanced tools and trainings to handle emerging challenges in tax administration. This includes fostering partnerships with international organizations to adopt global best practices in revenue management.
Copyright Business Recorder, 2025
