ISLAMABAD: Federal Board of Revenue (FBR) Chairman Rashid Mahmood Langrial Wednesday said tax has been imposed on digital platforms after serious concerns of formal retail sector paying sales tax as well as income tax on sales of goods.
During post-budget press conference held on Wednesday, the FBR chairman clarified that 2.5 per cent tax would be applicable on income slab between Rs600,000 and Rs1.2 million under revised salary slabs.
The tax rate of one per cent has been mentioned in the Finance Bill 2025-26.
Taxing the digital frontier: Pakistan’s bold move to tap e-commerce and online revenues
Over Rs100 billion worth digital invoicing sales have been reported to the FBR. Sales through digital invoicing needs strong deterrence under self-assessment scheme. The integration of sales tax registered persons has been started through authorised integrators including Pakistan Revenue Automation Limited (PRAL).
The FBR chairman stated that the country is moving towards digital economy. Formal retail sector is paying all kinds of taxes as compared to undocumented online companies engaged in selling of goods and paying no taxes.
All Pakistan Retail Association has complaint to the FBR that the market of the documented sector has been at the verge of collapse due to informal sector.
They are at a disadvantage of paying 18 per cent sales tax as compared to informal sector. The level playing field has been restored through the Finance Bill.
Two percent tax of gross value of supplies would be applicable on persons supplying digitally ordered goods from within Pakistan through online market place, website and software applications.
The FBR chairman stated that the board has included all taxable activities to incorporate digitally ordered taxable goods into the e-commerce sales tax framework.
Presently, online marketplaces are required to withhold one percent sales tax on local supplies made by non-active taxpayer vendors.
However, this does not fully capture the growing e-commerce sector, especially businesses using websites, apps, etc, for online sales to consumers.
To address this, the withholding tax scope has been expanded to cover transactions settled via online payment or CoD.
Under the proposed regime, payment intermediaries (banks, financial institutions, exchange companies, and payment gateways) will collect sales tax on digital payments, while couriers will handle tax collection for CoD transactions.
Additionally, the withholding tax rate is set to increase from one per cent to two per cent.
Under the Finance Bill 2025, in the case of supply of digitally ordered goods by online market place, website and software application from within Pakistan during the course of e-commerce, the liability tocollect and pay tax shall be of payment intermediary including a banking company, a financial institution, licensed exchange company or payment gateway in case the payment is made digitally and of the courier delivering the goods where those are supplied on Cash on Delivery (CoD) basis at the rates provided in the Eleventh Schedule.
The FBR chairman also stated that sales tax has been imposed on the import of solar panels to create an enabling environment for domestic manufacturing industry.
The FBR Member Inland Revenue (Policy) stated that domestic e-commerce covers a number of e-stores operating outside the formal banking system.
They sell goods through Bykea and websites.
The FBR has chalked out a domestic e-commerce framework for small and medium businesses selling goods through websites or online.
A simple regime has been introduced for payment of tax through couriers and banks with final discharge of tax liability.
The FBR Member said that four items have been included in the Third Schedule of the Sales Tax Act to check under-invoicing on the import of chocolates, pet food and imported cereal bars in retail packing.
The FBR chairman stated that the non-profit organisations would go through strict scrutiny under the Finance Bill 2025-26.
The FBR has laid down very strict conditions for the NPOs for availing exemption. Now the NPOs have to prove that they are not engaged in commercial activities. In future, we would review performance and scrutinise NPOs.
Pointing out that globally non-profit organisations were not subjected to tax measures, Langrial said, “No organisation will be exempt from scrutiny in the future.”
Under the Finance Bill 2025-26, the FBR has listed entities granted complete exemption on any income and exemption subject to Section 100C provision respectively have been merged.
Now all entities require approval under Section 100C to be declared as non-profit organisation and availing exemption against income.
Copyright Business Recorder, 2025
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