Just started a new business and looking to learn more about GST and PST in BC? This guide is for you. British Columbia uses a two-part sales tax system made up of the federal GST and the provincial PST, and we know many business owners find GST and PST difficult to navigate, especially when they’re trying to figure out which tax applies, when to charge it, and how to stay compliant. That’s exactly why we created this 2026 guide. At Business Registration Center BC, our goal is to educate and to break BC’s sales tax system into clear, simple steps so you can understand your obligations, avoid costly mistakes, and feel confident whether you’re starting or running a business in the province.
Here’s how BC’s two-part sales tax system really works:
- Goods and services tax (GST) – A 5% federal tax applies across Canada and is administered bt the Canada Revenue Agency (CRA)
- Provincial Sales Tax (PST) – A 7% provincial retail tax charged on most goods and specific services in BC, overseen by the Ministry of Finance in BC.
- Recoverability Difference – Businesses can claim input tax credits (ITCs) to recover GST paid on eligible expenses, but PST cannot be recovered, making accurate classifications essential.
What Are GST and PST in BC?
GST is a 5% federal tax administered by the Canada Revenue Agency.
PST is a 7% provincial retail tax handled by the BC Ministry of Finance.
Together, most purchases in BC are taxed at 12%. But whether an items get GST and PST in BC both, or neither, depends on what’s being sold.
Let’s continue diving deeper into each one separately.
Understanding How GST Works in BC
GST is a value-added tax, meaning businesses can recover GST paid through Input Tax Credits (ITCs). We claim these credits when we file our GST returns, which helps reduce operating costs.
GST applies to:
- Most goods
- Most services
- Digital products
- Online sales into BC
GST does not apply to exempt categories such as health care services, residential rent, financial services, and certain educational programs.
Understanding How PST Works in BC
PST is very different from GST. PST is a retail tax, meaning businesses cannot recover PST paid on purchases.
PST applies to:
- Tangible goods
- Software
- Telecommunications
- Accommodation under 28 days
- Some services (Repairs, installation, etc.)
PST is also charged when items are brought into BC for use here.
How Much Is GST and PST in BC?
The answer is simple:
GST: 5%
PST: 7%
Total: 12% combined
That combined 12% rate is one of the most stable tax structures in Canada and is expected to remain unchanged in 2026.
Tax Categories in BC (Easy Reference Table)
| Category | Examples | GST | PST |
|---|---|---|---|
| Taxable (Most Goods & Services) | Electronics, clothing, furniture | 5% | 7% |
| GST-Only Items | Professional services (legal, consulting) | 5% | Exempt |
| Zero-Rated | Basic groceries, prescription drugs | 0% | Exempt |
| PST-Exempt but GST Applies | Books, children’s clothing, school supplies | 5% | Exempt |
| Fully Exempt | Rent, medical services, child care | 0% | Exempt |
Step-by-Step: How GST and PST in BC Are Calculated
Let’s walk through a simple math example. This is where many new business owners can slip up.
Example: Selling a Backpack ($84.00 before tax)
Step 1: GST (5%)
84.00 × 0.05 = $4.20
Step 2: PST (7%)
84.00 × 0.07 = $5.88
Step 3: Total After Tax
84.00 + 4.20 + 5.88 = $94.08 total
Why This Matters
Both GST and PST are always calculated on the pre-tax price, not one on top of the other.
Practical Scenarios (Real-World Examples)
Retail Store
A $40 T-shirt → GST 5% + PST 7% = $4.80 tax total.
Software Company
Sells a subscription → GST 5% applies; PST generally applies to software too.
Short Term Accommodation
Hotel Stay → GST 5% + PST 7% + Municipal MRDT (varies).
E-Commerce Sellers Outside BC
If you sell into BC, GST and PST may still apply — destination matters.
When to Register for GST and PST
GST Registration
You must register if you earn over $30,00 in taxable sales in 12 months. Below that, registration is voluntary but helpful because ITCs reduce your costs.
PST Registration
You MUST register if you:
- Sell taxable goods in BC
- Provide taxable services
- Sell software or telecommunication services
- Sell goods to BC customers from outside the province
PST rules are stricter than many expect.
Filing, Collecting & Remitting Sales Tax in BC
GST Filing (Federal)
- File monthly, quarterly or annually
- Claim ITC’s
- File through CRA My Business Account
PST Filing (Provincial)
- File monthly, quarterly, semi-annually or annually
- No input credit
- File through eTaxBC
Three essentials for compliance
- Separate GST and PST on every invoice
- Keep detailed records for 6 years
- Update POS tax settings regularly
BC vs Federal Incorporation — Sales Tax Impact
| Feature | BC Provincial Incorporation | Federal Incorporation |
|---|---|---|
| Governing Body | BC Corporate Registry | Corporations Canada |
| Operating Name Protection | BC only | Across Canada |
| PST Requirements | Required | Required if operating in BC |
| GST Requirements | Required | Required |
| Filing Complexity | Simple | More complex |
| Best For | BC-focused businesses | Multi-province businesses |
Both structures still require understanding GST and PST in BC, especially if you plan to sell within the province.
Compliance Checklist — To Stay Audit-Ready
- Review which items are PST-exempt every year.
- Train your staff to understand basic GST/PST rules.
- Make sure your POS applies 5% GST and 7% PST correctly.
- Keep digital records for at least 6 years.
- Separate tax lines on every invoice.
Common Mistakes Businesses Make
- Charging GST correctly but forgetting PST.
- Applying PST on top of GST instead of the pre-tax price.
- Treating PST like GST and expecting a refund.
- Assuming digital products never attract PST.
- Not registering for PST when selling into BC.
Myths vs Facts About GST and PST in BC
| Myth | Fact |
|---|---|
| BC uses HST. | BC returned to separate GST + PST in 2013. |
| PST applies to everything. | Many items are PST-exempt. |
| Only GST needs registration. | Many businesses require both. |
| PST is a value-added tax. | PST is a retail tax with no recovery mechanism. |
| GST and PST are calculated together. | They are calculated separately on the pre-tax price. |
This article was prepared by the Business Registration Center BC team, with over 20 years of experience in provincial and federal business registrations. While reviewed for accuracy by our accounting specialists, the information is general in nature. Feel free to contact us anytime, Tel: 604-449-2000. Business Hours: Mon-Fri, 6 AM - 4 PM (PT). Email: info@brcbc.ca Address: 1248-13351 Commerce Pkwy, Richmond, V6V 2X7.
Our Final Thoughts and Where to Learn More About GST and PST in BC
Understanding GST and PST in BC is a key part of running and registering a business in the province. These taxes impact pricing, cash flow, and compliance, and even small errors can lead to penalties. By learning when to apply each tax, how to calculate them correctly, and how to file your returns, you set your business up for long-term success, whether you’re incorporated provincially or federally.
If you’d like to explore British Columbia’s sales tax rules in more depth, the following official resources are a great place to continue your research. These links provide up-to-date information on GST, PST exemptions, registration and compliance requirements for businesses operating in BC:
- BC Ministry of Finance (PST Information & Forms) – Learn about PST registration, exemptions, filing schedules and industry specific rules.
- Canada Revenue Agency – GST/HST Information for Businesses Access Federal guidance on GST requirements, filing deadlines, and input tax credit eligibility.
- PST Guide for small businesses – A helpful overview by the BC Government on how PST applies to goods, services, and digital products in British Columbia.
When you have the right information and resources, you can focus your time and energy on growing your business with confidence. If you’d like more support with incorporations and or any time of business registration in BC or simply understanding your obligations in British Columbia as a business owner, our team is here to guide you every step of the way.
FAQs About GST and PST in BC
1. How much is GST and PST in BC?
BC applies 5% GST and 7% PST, for a combined 12% on most goods and many services.
2. What items are PST-exempt in BC?
Books, children’s clothing, school supplies, basic groceries, and many health products are PST-exempt.
3. Do online businesses need to charge PST?
Yes—if you sell taxable goods, software, or services to BC customers, PST likely applies.
4. Can I recover PST like I do GST?
No. PST is not recoverable. Only GST can be claimed through ITCs.
5. Do I need to register for both GST and PST?
Most BC businesses must register for both, unless they sell exclusively exempt items.
6. Where can I learn more about GST/HST instead?
We have put together a separate guide for those looking for more information solely on GST/HST filings and registrations.