Which Sindh restaurants must integrate?

Answer first. Probably, but not certainly — and almost every page written about this gets it wrong in the same direction. SRB POS integration is not mandatory for every restaurant in Sindh. It applies to registered persons providing a service listed in the Schedule to the Sindh Sales Tax Special Procedure (Online Integration of Business) Rules, 2022, and a restaurant is caught only if it meets one of five tests: located in a hotel, motel or guesthouse; a franchiser or franchisee; more than one branch in Sindh; located in an air-conditioned shopping mall; or turnover above Rs 5 million over the immediately preceding twelve tax periods. A single-branch standalone restaurant below that figure is outside the mandate. If you are inside it, the harder question is not the software — it is that Sindh ties the tax rate to how each customer pays, and the reduced rate costs you input tax credit.

Where the obligation actually comes from

The mechanism is the Sindh Sales Tax Special Procedure (Online Integration of Business) Rules, 2022, notified as SRB-3-4/03/2022 on 21 February 2022 under section 72 of the Sindh Sales Tax on Services Act 2011. The duty it implements is provincial. It has nothing to do with FBR digital invoicing, which runs under the federal Sales Tax Act 1990, and being compliant with one says nothing about the other.

Rule 1(2) is the sentence most summaries skip: “These rules shall apply to the registered persons providing any of the services or class of services, specified in the Schedule to these rules.” Rule 3 repeats the limit — integration is required of “a registered person providing the services specified in the Schedule”. Two conditions, then, before anything else: you must be registered with SRB, and your service must be scheduled. The SRB POS guide walks the Schedule tests one by one.

Where it does apply, rule 3 requires all of that business’s points of sale to be connected, including those taking orders over the internet, and an online marketplace facilitating those services is caught in its own right. Rule 5 charges a service fee of one rupee per invoice generated, reported separately in your return. Rule 6 sets the particulars the invoice has to carry.

The Schedule has two entries, not a sector list

The Schedule was substituted by Notification SRB-3-4/25/2026 dated 30 June 2026, effective 1 July 2026. That is the text in force. It contains exactly two entries.

Restaurants (tariff heading 98.01), caught if they fall in any one of: located in hotels, motels and guesthouses; franchisers or franchisees; having more than one branch in Sindh; located at air-conditioned shopping malls; or turnover during the immediately preceding twelve tax periods exceeding rupees five million.

Beauty and physical well-being services — beauty parlours and salons, beauty clinics, slimming clinics, gyms, physical fitness centres and similar — under their own comparable set of category tests.

Two things follow that are worth stating plainly, because both are commonly reported the other way.

Hotels are not themselves in scope. Being located in a hotel, motel or guesthouse is one of the criteria that pulls a restaurant outlet in. It places no POS integration obligation on the hotel’s own room revenue, which sits at tariff heading 9801.1000 and carries no such requirement.

And the mandate does not reach the health sector generally. A clinic providing medical services is not caught by an entry aimed at beauty and physical well-being.

Why “mandatory for all restaurants” is everywhere

It comes from SRB’s own FAQ, quoted with its question removed. The question reads: “Should all restaurants falling in the Schedule of Sindh sales tax special procedure (online integration of business rules, 2022) integrate their POS with SRB?” The answer is “Yes. It is mandatory for all the restaurants to integrate with SRB PoS system.”

Vendors quote the answer. The qualifier is in the question.

The FAQ is also stale in its own right — it still refers to “International restaurants”, a category superseded in August 2022, and still lists a standalone online-marketplace entry that the current Schedule no longer carries in that form. It is not a reliable statement of today’s scope, and neither is any page built from it.

The turnover figure has moved too. It entered at Rs 10 million in August 2022, was cut to Rs 5 million on 31 July 2023, and stands at Rs 5 million in the Schedule substituted for 1 July 2026. A page quoting Rs 10 million is describing a position that ended three years ago.

The rate depends on how the customer pays

This is the part that makes Sindh operationally different from anywhere else in Pakistan, and it is not really a compliance question at all — it is a systems question.

The standard rate for restaurant services is 15%. Under the Second Schedule the rate falls to 8% where payment against the tax invoice is received by debit card, credit card, mobile wallet or QR scanning. Cash and any other channel remain at 15%.

So the same meal, at the same restaurant, on the same evening, carries a different rate depending on how the bill is settled. The till cannot compute the tax until it knows how the customer paid. A split payment — part card, part cash — has to be resolved rather than guessed.

This is where a counter built for federal invoicing alone tends to break. FBR’s structure does not vary with the payment channel, so a system designed only for it usually computes tax before payment is taken. In Sindh that ordering is simply wrong, and the error stays invisible until a reconciliation or an audit surfaces it months later.

The 8% is not free, and that is the interesting part

General Condition (1) to Part II of the Second Schedule attaches a condition that most coverage omits: no input tax credit or adjustment is admissible at the reduced 8% rate.

For a restaurant with meaningful input tax, that changes the arithmetic completely. The headline difference between 8% and 15% is not the number that matters; what matters is 8% with no input adjustment against 15% with one.

Which is why the alternative exists. Restaurants and cafés may apply to SRB for a special dispensation to charge the standard 15% on digital payments and claim input tax adjustments. Operators take it for two reasons: it keeps menu pricing consistent across payment methods, and it preserves input credit.

It also removes the branching from the counter entirely — one rate, no dependency on the payment step. If you are weighing what that means for the till itself, running SRB and FBR from one counter is the shape of the alternative. If you are about to rebuild a till around per-payment logic, it is worth pricing this option first. Whether it suits you depends on your own input tax position, so it belongs with your adviser rather than being adopted as a default.

What non-integration costs

Penalties sit in section 43 of the Sindh Sales Tax on Services Act 2011, and the figure that circulates most widely is out of date.

Serial 2B, as substituted by the Sindh Finance Act 2024 with effect from 1 July 2024, provides for a penalty of up to Rs 1,000,000, but not less than Rs 100,000, for a person who avoids, defies or fails to comply with the e-invoicing system, issues invoices outside it, or refuses, denies or obstructs enforcement of section 54A. On repetition the business premises are liable to be sealed. On conviction by a Special Judge there is further liability to imprisonment of up to one year, or a fine of up to Rs 100,000, or both.

Rs 100,000 is the floor. A good deal of published material presents it as the ceiling, which describes the position before 1 July 2024 and understates current exposure by a factor of ten.

You may also see Serial 7B cited, carrying a penalty of Rs 100,000 or an amount equal to the tax involved, whichever is higher. That entry was inserted by the Sindh Finance Act 2017 and omitted by the Sindh Finance Act 2024. It is not live law, and any page relying on it is quoting a provision that has not existed since June 2024.

A separate entry, Serial 2A, deals with failure to issue a tax invoice under rule 29 of the Sindh Sales Tax on Services Rules 2011 — Rs 20,000 on a first default and Rs 50,000 for each subsequent one. Which entry a particular default falls under depends on your own facts.

Returns, and why the SDC matters

The component that receives your transaction data is the Sales Data Controller, or SDC. Its second job is the one worth knowing about: it handles sales returns and exchange adjustments through credit notes.

That gives a refund at a Karachi counter a documented route. The alternative — voiding the sale quietly in the POS — leaves the reported figure wrong and the correction untraceable, which is precisely the gap real-time reporting exists to close.

Does SRB share data with FBR?

Not by name, and the claim is usually overstated.

The Sindh Finance Act 2026 inserted section 73A into the Sindh Sales Tax on Services Act 2011 with effect from 1 July 2026. It makes the particulars a taxpayer files with SRB confidential as a general rule, then permits disclosure to a department or authority of the Federal or a Provincial Government authorised under the relevant law to access it, or under an agreement SRB makes with such an authority to enforce a tax it collects.

FBR is not named anywhere in the provision. The description covers it, but it equally covers PRA, KPRA, BRA, NADRA and provincial excise departments. Section 73A does not by itself create an SRB–FBR data feed.

What it does mean, practically, is that a gap between your provincial and federal records is more exposed than it was. That is an argument for running both from one set of records — not because a feed exists, but because reconciling two systems by hand is where the gap appears in the first place.

Sindh is not Punjab

If you operate in both provinces, you are answering two different questions rather than one question twice.

Punjab’s e-IMS obligation turns on turnover under rule 3 of the Punjab Electronic Invoice Monitoring System Rules 2019 — Rs 6 million for restaurant services, Rs 10 million for all other services, measured in FY 2017-18 or any subsequent financial year. It is sector-neutral: the Rules carry no schedule of covered sectors at all, which is why beauty parlours are inside Punjab e-IMS despite being widely reported otherwise.

Sindh frames the duty around scheduled services plus category tests, one of which happens to be turnover.

So a business can sit inside SRB’s scope and outside PRA’s, or the reverse. The rates differ, the penalties differ, and the receipt requirements differ. A multi-province operator running the two from separate tools ends up reconciling them by hand every month.

FAQs

Is SRB POS integration mandatory for every restaurant in Sindh? No. A restaurant is caught only if it is located in a hotel, motel or guesthouse; is a franchiser or franchisee; has more than one branch in Sindh; is located in an air-conditioned shopping mall; or had turnover above Rs 5 million over the immediately preceding twelve tax periods. A single-branch standalone restaurant meeting none of those is outside the mandate.

Are hotels covered by the SRB POS mandate? Hotel and accommodation services are not themselves in the Schedule. Being located in a hotel, motel or guesthouse is one of the criteria that brings a restaurant or salon outlet into scope; it is not an obligation on the hotel’s room revenue.

Why is the tax rate lower for card payments? SRB applies a reduced rate to encourage documented payments. Where payment against the tax invoice is received by debit or credit card, mobile wallet or QR scanning, the rate is 8%; cash and any other channel remain at 15%. No input tax credit is admissible at the reduced rate.

Can we charge 15% on card payments instead? Yes. Restaurants and cafés may apply to SRB for a special dispensation to charge the standard 15% on digital payments and claim input tax adjustments. Whether that suits you depends on your input tax position and your pricing.

What is the penalty for not integrating? Serial 2B of section 43 of the Sindh Sales Tax on Services Act 2011, as substituted by the Sindh Finance Act 2024, provides for up to Rs 1,000,000 and not less than Rs 100,000, with the premises liable to sealing on repetition and imprisonment of up to one year on conviction by a Special Judge. The older Serial 7B, still widely quoted, was omitted by the same Act.

Does being FBR-integrated cover us in Sindh? No. They are separate systems under separate statutes run by separate authorities. A Karachi restaurant fully integrated with FBR can still be in default with SRB on the same day’s trading.