Islamabad, July 2, 2025 – Dining out in Islamabad just got more affordable—if you know the rules. The Federal Board of Revenue (FBR) has introduced a new mechanism that lets customers pay only 5% sales tax at Islamabad restaurants, provided they follow one simple condition.
Under the Islamabad Capital Territory (Tax on Services) Ordinance, 2001, the FBR has slashed the sales tax rate from the usual 15% to just 5%—but only when payment is made digitally. That means if you’re eating at your favorite restaurant in Islamabad and pay with a debit card, credit card, mobile wallet, or QR code, you qualify for the reduced rate.
However, there’s a catch: you cannot claim any input tax adjustment or refund on such payments. For those paying with cash, the traditional 15% rate still applies.
The revised tax structure covers a wide array of food establishments across the capital. According to the FBR, the reduced rate applies to services rendered by restaurants, cafes, ice-cream parlors, coffee houses, deras, food huts, eateries, resorts, and all similar cooked or ready-to-eat food outlets operating in Islamabad. This move aims to encourage digital transactions while offering a tangible incentive to both consumers and businesses.
But not all hospitality sectors get this benefit. The FBR clarified that services offered by hotels, motels, guest houses, farmhouses, marriage halls, lawns, clubs, and caterers in Islamabad will continue to be taxed at the standard 15%, regardless of the mode of payment.
For restaurant-goers in Islamabad, this presents a clear choice: stick with cash and pay the full tax, or switch to a digital method and enjoy a lighter bill. With dozens of restaurants in Islamabad now encouraging cashless payments, the incentive is already reshaping how people dine and pay in the capital.
So the next time you head to your favorite spot in Islamabad, remember this tip—go digital and save 10% instantly on your tax.