The Lahore High Court has directed the National Tax Council (NTC) to decide, within two weeks, which province is entitled to the sales tax that stockbrokers charge their customers — a question that has long unsettled Pakistan’s brokerage industry. A division bench of Justice Muhammad Ajmal Zahid and Justice Hassan Nawaz Makhdoom issued the direction on 21 September 2026 in Writ Petition No. 52513 of 2026, filed by Lahore-based brokerage house M/s Zafar Securities (Pvt.) Ltd. against the Punjab Revenue Authority, the Government of Punjab, the NTC and the Federal Government. The Court ordered the NTC to decide the petitioner’s pending application through a speaking order, strictly in accordance with law, after hearing the petitioner and all concerned parties, within a fortnight of receiving the order.

The dispute stems from competing claims by two provincial tax authorities over the same transactions. Zafar Securities operates from Lahore and serves clients in Punjab, and has been collecting sales tax on its services and depositing it with the Punjab Revenue Authority under the Punjab Sales Tax on Services Act, 2012. The Sindh Revenue Board, however, has demanded tax on the very same services, on the basis that every share trade in the country is executed through the Pakistan Stock Exchange’s Karachi Automated Trading System, whose server sits in Karachi. The brokerage was thus left facing a second demand for tax it had already paid to Punjab. It approached the NTC on 5 December 2025 for a determination; the application remained undecided for more than nine months, prompting the petition.

Appearing for the petitioner, Mr. Jahanzeb Sukhera and Ms. Kashish Leghari of Mandviwalla & Zafar argued that the location of a trading server cannot turn Karachi into the broker’s place of business — the office, staff and clients are all in Punjab, making the services an economic activity carried out entirely within that province. They contended that the question is, at its core, an inter-governmental dispute over the constitutional allocation of taxing powers, which the two provinces should resolve between themselves with the NTC’s facilitation rather than leave individual taxpayers caught in the middle. They further asked that, should the Sindh Revenue Board ultimately be found to be the correct authority, the tax already paid to Punjab be transferred to it without any retrospective demand, penalty or surcharge on a taxpayer that had acted in good faith.

The National Tax Council is the forum designed for precisely this kind of dispute. After the 18th Constitutional Amendment devolved the power to tax services to the provinces — each of which set up its own revenue authority and services-tax law — cross-border services raised the prospect of conflicting claims and double taxation. The NTC’s mandate includes harmonising sales tax on services and resolving jurisdictional disputes between the federation and the provinces, and among the provinces themselves. With no other adequate remedy available to compel the Council to act, the petitioner turned to the High Court, which has now set a firm deadline.

The NTC’s decision is likely to be closely watched across the market. Brokerage houses throughout the country route their trades through the same Karachi-based system, and the outcome could settle where sales tax on brokerage services provided outside Sindh is ultimately payable.

In the Press: The Nation, 24 September 2026 · Dawn, 25 September 2026