Digital payment programme for restaurants: PTBA accuses SRB of creating disparity

KARACHI: Pakistan Tax Bar Association (PTBA) has accused the Sindh Revenue Board (SRB) of creating an unfair disparity in its digital payment incentive program for restaurants, warning that selective treatment of businesses could undermine the province’s broader tax documentation drive.

In a letter to SRB Chairman Dr. Wasif Ali Memon, the PTBA questioned how the revenue authority granted special dispensation to 73 eateries to continue charging the standard 15% sales tax rate even on card and mobile wallet transactions, despite implementing a reduced 8% rate for restaurants accepting digital payments.

For tax year 2024-25, the SRB restructured restaurant taxation across the province, increasing sales tax rates from 13% to 15% on all restaurant services while positioning itself as a progressive revenue authority moving toward digital documentation.

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The authority introduced a dual-tax-rate system designed to incentivize electronic payments. Under this scheme, restaurants accepting payments through debit cards, credit cards, mobile wallets, or QR code scanning charge customers only 8% tax, while cash transactions attract the full 15% rate.

To encourage broader POS integration, the SRB offered already POS-integrated restaurants and cafes special dispensation, allowing them to continue charging the standard 15% rate even on digital payments while claiming input tax adjustments to keep prices rationalized.

However, this special dispensation has proved highly controversial, as the list of privileged restaurants has not been expanded, whether intentionally or unintentionally, creating an uneven playing field where some restaurants benefit from preferential treatment while others face competitive disadvantages.

The SRB’s decision to allow certain establishments to bypass the digital payment incentive while maintaining the ability to claim input tax benefits has sparked accusations of favoritism and discriminatory treatment within the restaurant sector.

Copyright Business Recorder, 2025