KARACHI: The Sindh government has taken a significant step towards formalizing its provincial tax regime by making it mandatory for all individuals and entities providing “renting of immovable property services” to issue tax invoices.
This new requirement, formalized through Notification No. 3-4/41/2025 issued by the Sindh Revenue Board (SRB) on July 16, 2025, is part of a broader strategy to enhance transparency and improve tax compliance across key sectors.
Mandatory Invoicing for Property Rental Services
Under the new directive, all providers of property rental services within Sindh are now obligated to issue tax invoices in accordance with sub-rule (1) of Rule 29 of the Sindh Sales Tax on Services Rules, 2011. These service providers are required to charge and collect sales tax at a fixed rate of 3% on their rental services. This move is expected to bring a substantial portion of the informal rental economy into the documented tax net.
Key Changes in the Construction Sector
In addition to rental services, the Sindh government has also implemented crucial changes to taxation within the construction sector, aiming to provide flexibility while ensuring compliance:
Standard Rate: The standard sales tax rate for construction services remains at 15%.
Optional Reduced Rate: Service providers in the construction sector now have the option to pay a reduced rate of 8%. To avail this lower rate, they must declare their election electronically via Form “C” on the SRB web portal within 21 days from the beginning of the financial year.
New Entrants: New businesses entering the construction services sector in Sindh must exercise this option at least 14 days before commencing their economic activities.
Validity of Chosen Rate: Once selected, the chosen tax rate (either 15% or the reduced 8%) will remain valid for the current financial year and all subsequent years, unless it is formally revoked electronically through the prescribed procedure.
