Last updated on Monday, 24, November, 2025

Income Tax on Clinics in Pakistan: What You Need to Know

In recent months, the Punjab Revenue Authority (PRA) has stepped up its enforcement against beauty and aesthetic clinics, exposing long-standing tax evasion in this high-revenue sector. Clinics generating crores in annual profit are now being formally registered, digitally tracked, and integrated into Pakistan’s tax net a move that could reshape the regulatory landscape for health, wellness, and beauty services. 

This article explores how income/service tax applies to clinics in Pakistan, why the PRA crackdown matters, and what clinic owners and patients should know.

Why Clinics Are Under the Tax Radar

Sheer Volume of Revenue

According to PRA officials, many beauty clinics in Punjab (especially in big cities like Lahore) have been generating billions of rupees annually without paying appropriate taxes. 

• In one case, PRA identified an aesthetic clinic alone with Rs 1.8 billion in annual sales that had previously flown under the radar. 
• About 50 such “tax-evading” clinics have been detected so far. 

New Sectors Under Survey

PRA is auditing 11 new sectors, including beauty parlors, aesthetic clinics, health clubs, and cosmetic surgery centers, signaling a broad drive to expand the tax base.

Digital Monitoring via E-Invoice System

These clinics will be formally registered and linked with the Electronic Invoice / Information Management System (EIMS), enabling real-time tracking of sales and tax compliance. 

Strengthening Enforcement

To close the compliance gap, PRA is deploying more enforcement officers, creating a dedicated monitoring cell, and using digital tools to keep performance and accountability high. 

What Is the Applicable Tax Rate for Clinics?

To understand how tax applies, it’s helpful to look at provincial tax laws and rates:

• According to a KPMG brief on provincial tax laws (2025), services by private-sector health care centers (including clinics) are taxed under service tax regimes, not standard corporate income tax. 
• Specifically, “services provided … by beauty parlors, beauty clinics, health care centers, cosmetic or plastic surgery centers / clinics …” fall under a 5% tax rate, with no input-tax adjustment. 
• In Khyber Pakhtunkhwa (KP), there is also a 5% service tax on similar clinic and beauty services. 

Implication: These clinics are primarily subject to service tax, not traditional income tax. But within that service tax, PRA’s measures are making it harder to evade.

What Does the PRA Crackdown Mean for Clinics?

Formal Registration & Tax Compliance

• Clinics that have not been paying tax will now be formally registered with PRA.
• Through EIMS, every transaction could be recorded and reported. 
• This increases transparency, making electronic invoicing mandatory for a broader set of service providers.

Capacity Building

• PRA is boosting its field force by hiring more enforcement officers. 
• A dedicated digital monitoring cell is being set up to track staff performance and compliance.

Widening the Tax Base

• By including beauty clinics in the tax net, PRA is not just collecting revenue it’s also expanding its tax base, making the system more equitable. 
• The survey is set to be completed by December, meaning more non-registered clinics may soon be formally assessed for taxes. 

Enforcement Risks for Non-compliant Clinics

• Clinics that resist may face penalties, audits, and even forced closure if they are found intentionally evading tax. 
• PRA’s rollout of EIMS increases the risk of being “caught in the system” since all invoices will be traceable.

Challenges & Concerns

While the crackdown is a positive step for tax fairness, several potential challenges loom:

• Operational Burden: Smaller clinics that were not previously registered may struggle with the administrative and technical burden of EIMS compliance.
• Cash-based Business: A large portion of such businesses may have operated in cash; forcing digital invoicing may disrupt traditional business practices.
• Resistance / Evasion: Some clinic owners may resist or find workarounds. Enforcement depends heavily on PRA’s capacity and persistence.
• Pricing Impact on Clients: If clinics face higher compliance costs, they may pass them on to clients, potentially increasing the cost of beauty and wellness services.

Why This Matters for Patients & Clinicians

• For Patients: More regulation means potentially more transparency your invoices may now clearly show tax, helping you verify that businesses are compliant.
• For Clinic Owners: It’s time to get compliant. Registering, integrating with EIMS, and maintaining detailed transaction records will not only avoid penalties but also build trust with regulators and clients.
• For Investors in Clinics: The crackdown underscores that this is a “legitimate” and taxable business now. Investors should factor in the expected tax liabilities and compliance costs.

Broader Fiscal Context

• PRA’s Strategy: This move aligns with broader efforts by PRA to modernize tax administration and close loopholes. 
• Revenue Pressure: As Pakistan seeks to increase its domestic revenue, expanding service-sector taxation (e.g., clinics, beauty parlors) gives the government a new frontier for tax collection. 
• Digital Tax Infrastructure: The EIMS system is part of a broader digitization strategy, enabling more real-time tax tracking and reducing reliance on manual audits.  

Conclusion

The PRA’s intensified crackdown on beauty clinics marks a turning point these businesses can no longer operate in the shadows. By leveraging digital infrastructure like EIMS and expanding enforcement capacity, the authority is pushing for a more transparent, compliant, and equitable tax regime.

For clinic owners, compliance is no longer optional it’s essential. For regulators, this opens up a major revenue stream. And for patients, it could mean cleaner business practices and clearer billing. As the landscape shifts, Instacare.com.pk can play a vital role in guiding, educating, and influencing the sector toward responsible growth.