On 16 June 2026, the Punjab Finance Bill, 2026 was tabled before the Provincial Assembly. Tucked inside it is a focused but far-reaching overhaul of the Punjab Sales Tax on Services Act 2012 — the rules administered by the Punjab Revenue Authority (PRA). If the Bill passes, the changes take effect on 1 July 2026.

These aren’t minor tweaks. Almost every PRA-registered service business will feel the impact — through a higher rate it must charge, a higher cost of dealing with non-compliant suppliers, slower recovery of input tax, or steeper penalties for everyday slip-ups. Here are the five shifts that matter, and what to do about them.

1. Claiming input tax just got harder

Four separate changes tighten how, when, and whether you can claim input tax — the sales tax you pay on your own purchases and set off against the tax you collect from customers. Together, they raise your cash cost and slow your recovery.

• Non-compliant suppliers become a dead cost. You can no longer claim input tax on invoices from suppliers who aren’t on the Active Taxpayers List (ATL) of the PRA or FBR — even if they charged you the tax.
• The adjustment cap drops from 90% to 80%. You must now pay at least 20% of your output tax in cash every period, up from 10% — a direct hit to working capital.
• Big purchases are spread over a year. Input tax on capital assets, machinery and fit-out must be claimed in 12 equal monthly instalments, not all at once.
• A risk engine can hold back your claims. A new risk-based system can defer, reduce or disallow input-tax claims and refunds — making clean documentation and ATL-compliant suppliers essential.

2. Many service rates jump from 5% to 8%

The headline “reduced rate” for a long list of services rises by three percentage points.

It affects a wide span of businesses, including marriage halls and caterers, tour operators and travel agents, property dealers and realtors, architects and interior designers, gyms and recreation venues, laundries and dry cleaners, warehouses and cold stores, equipment rental, and estate-management services. Notably, the professional-fee clause for accountants, auditors and tax consultants moves to 8% too — so advisers are in the net alongside their clients.

Hotels and restaurants: go digital, or pay double

For hotels, motels and guest houses, the old room-count split is replaced by a payment-mode split: 8% when guests pay by debit or credit card, mobile wallet or QR scan, and 16% on cash and other methods. Restaurants already work this way; their digital-payment rate simply rises from 5% to 8%, while cash stays at 16%. The message is clear — reward digital payments, or charge customers more.

3. New services pulled into the net

Two sectors are newly — or more clearly — taxable:

• Money changers and exchange companies now face a 3% levy on currency-exchange spread charges, as permitted by the State Bank of Pakistan.
• Event management gets its own standalone entry at 8%, removing any doubt that the whole range of event services is separately taxable.

4. Penalties rise by an order of magnitude

Invoicing and record-keeping defaults are now backed by dramatically higher penalties. Failure or refusal to issue a tax invoice jumps from Rs 20,000 / 50,000 to Rs 500,000 / 1,000,000. Tampering with the e-invoicing system rises to Rs 500,000 per act, and there’s a separate, higher penalty band for companies and AOPs that fail to produce records. Repeat defaults can still mean sealing of premises and, in some cases, prosecution.

5. Your ATL status is now business-critical

Two linked changes turn the Active Taxpayers List from an administrative formality into a gatekeeper:

• Miss two consecutive returns and you’re off the ATL. The definition of “active taxpayer” now excludes anyone who fails to file for the last two consecutive tax periods.
• Off the ATL can mean off the market. Licensing authorities may refuse to issue or renew licences, and public bodies may be barred from awarding contracts, to anyone not registered and on the ATL. (Newly established businesses get a six-month grace period.)

Because of the new supplier rule, losing ATL status hurts your customers too — they lose the input tax on your invoices.

Does this affect you?

If your business appears below, the rate you charge is rising — and the input-tax, penalty and ATL changes apply to virtually every registered person regardless.

Your 1 July action checklist

1. Protect your ATL status. File every return on time — two consecutive misses now drop you off the list.
2. Screen your suppliers. Check vendors against the PRA and FBR ATL before booking input tax; non-ATL invoices are no longer claimable.
3. Re-model your cash flow. Plan for 20% of output tax in cash each period, and capex input tax recovered over 12 months.
4. Update pricing and systems. Reconfigure POS and billing for the new 8% rate and the digital-versus-cash split.
5. Tighten invoicing. With penalties up to Rs 1,000,000, make e-invoicing compliance airtight.
6. Register early if newly taxed. Money changers (3%) and event managers (8%) should be ready to invoice and remit from 1 July.