Karachi, January 14, 2026 – The Karachi Tax Bar Association (KTBA) hosted a seminar addressing the adoption of Central Product Classification (CPC) Version 2.1 by the Sindh Revenue Board (SRB), highlighting practical challenges and implications for businesses in the province.
The session featured Adnan Mufti, Partner at Moore Shekha Mufti Chartered Accountants, who delivered a detailed presentation on CPC implementation and its impact on the taxation of services under the new Sindh tax framework.
Key Features of the New Taxation Scheme
Under the updated system, a ‘negative list’ has been prescribed, meaning all services provided in Sindh are now taxable unless specifically exempted. The framework introduces a broader definition of ‘service,’ encompassing any activity, facility, utility, or advantage, including the granting, assignment, cession, or surrender of any right, aligning with decisions of the Superior Courts.
The classification framework for taxable services has shifted from the Harmonized System (HS) to the CPC Version 2.1 as published by the United Nations. Notably, definitions of services have been omitted from the Act, and SRB is now empowered to prescribe CPC codes through the Official Gazette.
Key points include:
• Inclusion or exclusion of a service under CPC does not determine its taxability.
• Any dispute regarding classification under CPC will be resolved by the Board, and such decisions are final.
Understanding CPC Version 2.1
The Central Product Classification (CPC) Version 2.1 is a globally recognized framework by the UN Statistics Division, designed to standardize data collection for economic analysis. Key features:
• Provides international comparability for goods and services statistics.
• Uses a five-level hierarchical structure with exhaustive and mutually exclusive categories.
• Covers all goods and services, collectively referred to as ‘products.’
Advantages of CPC Adoption
• Standardized Classification of Services: Facilitates clear identification of intangible services.
• International Alignment: Supports compliance with IMF, World Bank, and WTO reporting standards.
• Tax Base Expansion: Identifies previously untaxed or under-taxed services without increasing rates.
• Economic Data Support: Assists Pakistan Bureau of Statistics (PBS) in estimating GDP by product, supporting tax-to-GDP analysis.
Practical Challenges Highlighted
Speakers at the seminar raised several practical concerns for businesses and taxpayers:
• Unilateral Updates: SRB may update profiles post-CPC adoption without consultation.
• Tax Rate Changes: CPC implementation may inadvertently alter applicable tax rates.
• Tax Jurisdiction Shifts: Business classifications may shift across jurisdictions.
• Mismatch with FBR Systems: While SRB uses CPC, FBR relies on HS Codes, potentially generating queries during invoice uploads or refunds.
• Broader Nomenclature Impact: Expanded CPC categories may cause tax authorities to treat similar businesses differently.
Examples of Conflicting Classifications
| Service Description (HS Code, pre-July 2025) | Service Description (CPC, post-July 2025) |
| 9815.9000: Other Consultants, including Tax Consultants, HR & Personnel Development | 8311: Management Consulting & Management Services |
| 9815.3000: Accounts & Auditors | 822: Accounting, Auditing & Bookkeeping Services |
| 9833.0000: Corporate Law Consultants | 821: Legal Services |
The seminar concluded with recommendations that ISIC codes be used to profile business activity, while CPC codes be applied strictly for product classification.
KTBA emphasized that while CPC adoption aligns Sindh with international standards, careful monitoring and harmonization with federal systems are crucial to avoid operational conflicts for businesses.