Paid PRA tax late? The High Court says surcharge starts 16 days after the due date

What the court decided

A hotel company in Lahore paid its PRA sales tax late for some months. PRA charged it Rs 2,486,219 in default surcharge, counted from the day after each due date. PRA's Commissioner (Appeals) and the PRA Appellate Tribunal both kept it.

The company took the case to the Lahore High Court. The question was simple: when does the surcharge clock start? Section 49(2) of the Punjab Sales Tax on Services Act 2012 says it is counted from "the sixteenth day following the due date" of the tax period.

PRA read that as the 16th of the month, the day after the 15th. The court disagreed. If the due date is 15 November, then 16 November is the first day after it, and the sixteenth day after it is 1 December. Reading "sixteenth" as "first" would rewrite the law, the court said.

So the court set aside the surcharge to that extent and sent the case back to PRA to work it out again, from the right date and without counting the day the tax was paid.

Find your surcharge start date

Pick the month your sales were in and the date you paid. The surcharge starts 16 days after the 15th, which is not always the 1st of a month: after 15 January it is 31 January, and after 15 February it is 3 March.

If PRA moves a due date by notification, as it sometimes does, count the 16 days from the new due date instead.

A worked example

Say your October 2026 tax is Rs 1,000,000 and you pay it on 10 December 2026.

• The way PRA counted: from 16 November to 9 December, which is 24 days.
• The way the court reads the law: from 1 December to 9 December, which is 9 days.

The yearly rate is the inter-bank rate plus 3%. At a yearly rate of 14%, for example, 24 days comes to about Rs 9,205, and 9 days to about Rs 3,452. The later start cuts the surcharge by more than half in this case.

What it means for you

• Pay by the 15th anyway. The court was clear: tax paid after the 15th is still a default. Only the surcharge count starts later, and penalties for late payment are a separate matter.
• Check any surcharge PRA has charged you. If it was counted from the 16th of the month, this judgment says it should start 16 days after the due date. The case is Tax Reference (PRA) No. 12004 of 2023, Al-Rehman Hospitality (Pvt) Limited v. Appellate Tribunal PRA.
• The payment day doesn't count. The surcharge runs to the day before you pay.

Avoid surcharge altogether

The cheapest surcharge is none. Paying on time is easier when your month's sales are already in one place. With PRA's E-IMS, every bill is sent to PRA as you make it, so your sales for the month are on record before the 15th.

eInvoicePro is the software that sends your bills to PRA E-IMS and prints each one with PRA's invoice number and QR code. See eInvoicePro for PRA E-IMS.

FAQs

When does PRA default surcharge start? From the 16th day after the due date, under section 49(2) of the Punjab Sales Tax on Services Act 2012, as the Lahore High Court read it on 13 October 2026. The due date is the 15th of the month after the tax period, so for October's tax the surcharge starts on 1 December.

Is the surcharge always from the 1st of the next month? No. It is 16 days after the 15th. After 15 November that is 1 December, but after 15 January it is 31 January, and after 15 February it is 3 March.

If I pay on the 20th, am I still late? Yes. Tax must be paid by the 15th. The ruling only moves the date the surcharge is counted from, not the due date.

What is the PRA default surcharge rate? The inter-bank rate plus 3% a year on the tax paid late. Where the default comes from tax fraud, it is 2% a month on the tax evaded.

PRA charged me surcharge from the 16th of the month. What can I do? Point to this judgment: Tax Reference (PRA) No. 12004 of 2023, decided by the Lahore High Court on 13 October 2026. In that case the court sent the surcharge back to PRA to be worked out again from the right date.

Does the day I pay count? No. The surcharge runs to the day before the tax is paid.

Related reading: PRA E-IMS in Punjab, what changed at PRA in 2026 and October's PRA E-IMS notices.