On 1 October 2026 a Division Bench of the Sindh High Court held, in Zafar Securities (Pvt.) Ltd. v. Sindh Revenue Board (Special Sales Tax Reference Application Nos. 182 and 183 of 2025), that from 1 July 2017 a stockbroker whose trades are executed through the Karachi Automated Trading System (KATS) has a ‘place of business in Sindh’, so that its brokerage is a taxable service under the Sindh Sales Tax on Services Act 2011 even where the broker serves its clients from an office outside Sindh. For periods before 1 July 2017 the Court followed its earlier decision in Summit Capital and held such brokerage not taxable in Sindh.

The turning point is the Sindh Finance Act 2017, which extended the definition of ‘place of business in Sindh’ to a person carrying on an economic activity ‘through virtual presence or a website or a web portal or through any other form of e-Commerce’. The Court read a broker whose orders are matched on KATS — a system owned and operated by the Pakistan Stock Exchange in Karachi — as carrying on its activity, at least in part, through an electronic trading system situated in Sindh. It expressly declined to decide the questions of double taxation and of the constitutional limits on provincial taxation, holding that they did not arise in its reference jurisdiction.

Because every trading right entitlement certificate holder routes its orders to KATS, the reasoning potentially gives every stockbroker in the country a place of business in Sindh from 1 July 2017, wherever its offices are and wherever its clients reside — while the broker’s own province continues to tax the same brokerage, raising the prospect of overlapping claims on a single commission. The Sindh Revenue Board’s challenge to Summit Capital is already pending before the Supreme Court, which is expected to be asked to settle the position for both periods.

The full Tax Update — including what the judgment means for brokers across Pakistan and the questions it leaves open for the Supreme Court — is attached.