Peshawar High Court maintains Khyber Pakhtunkhwa’s sales tax on building services.

Pakistan’s constitutional court maintains the Khyber Pakhtunkhwa construction services tax, pronouncing it legitimate and eliminating double taxation.

PESHAWAR (Channel News Pakistan) – The Federal Constitutional Court has dismissed challenges against the Khyber Pakhtunkhwa Sales Tax on Services Act, 2022, declaring the building services tax valid.

Justice Aamir Farooq gave a written decision reaffirming that, under the 27th Constitutional Amendment, the Supreme Court cannot nullify laws on constitutional grounds.

The court stated that Schedule 2, Serial 14 of the Act, which covers construction services, does not violate the Constitution since it pertains to services rather than products.

The ruling stressed that after the 18th Amendment, provinces may charge taxes on services whereas the federal government can tax products.

With correct allocation procedures in place, citizens and businesses would not incur double taxes. The Revenue Authority was asked to set standards for dividing contractors’ budgets into services and products components.