by 1 What’s New in Islamabad’s Tax Policy?
- Beauty Parlours & Personal Care Clinics
Under the Islamabad Capital Territory (Tax on Services) Ordinance, 2001 (amended by Finance Act 2022), services like those offered by beauty parlours, slimming centers, pedicure/massage clinics, and cosmetic surgery centers are subject to a 15% sales tax. - Hotels, Restaurants & Marriage Halls
The same rule extends to services offered by hotels, motels, guest houses, farmhouses, restaurants, marriage halls, lawns, clubs, and caterers in Islamabad.
💳 2. Digital Payments = Lower Tax
A carrot for digitization:
- If you pay with debit/credit card, mobile wallets, or QR code, the sales tax rate drops to 5%.
- Cash transactions remain at the full 15% rate.
Real talk from Islamabad patrons on Reddit:
“Restaurants in Islamabad have a 5% tax if you pay by card, and 15% tax if you pay cash…”
🏩 3. Practical Impact on Businesses & Consumers
- Higher Costs for Cash-Pay Customers
Choosing cash automatically raises your tab by 10% compared to digital payment, a detail many businesses may not highlight. - Fair Treatment for Digital Users
Paying digitally not only saves you money but also promotes transparency and discourages under-the-table deals. Islamabad’s FBR even provides QR-code-equipped invoices to monitor proper tax practices. Islamabad Sales Tax 2025
📅 4. Timeline of the Change
- Budget 2023–24 officially introduced this tax shift, approving amendments to the Tax on Services Ordinance.
- May 2023 saw the FBR formalize its application on targeted sectors.
- July 2023 updates emphasized the 5% digital-versus-15% cash rule .
✍️ 5. Why This Matters
- For Consumers: Going digital means paying significantly less.
- For Businesses: Digitization may expand customer base and reduce audit risk.
- For the Government: This tax helps broaden the formal economy, encourages financial transparency, and boosts revenue, especially from cash-based sectors.
✨ 6. Tips & Takeaways
- Always ask for the “FBR QR invoice” whenever you dine, get beauty treatments, or book event venues—digitally appears cheaper.
- Verify tax rates:
- Digital payment → 5% sales tax
- Cash payment → 15% sales tax
- Use the FBR Tax Asaan app to verify correct billing and report overcharging.
📌 Bottom Line
Islamabad’s 15% tax on services such as beauty parlours, hotels, and marriage halls was introduced in mid‑2023 and includes a digital payment incentive: just 5% instead of 15%. This scheme benefits tech-savvy consumers and enables businesses to align with formal compliance standards.
