E-Commerce Tax Enforcement in Pakistan: Penalties, Policies & New Compliance Regime

In the wake of Pakistan’s growing e-commerce sector, the Finance Bill 2025 and recent Sales Tax reforms have laid out a much stricter compliance and enforcement structure for digital businesses, marketplaces, banks, and courier services.

This article explains the current rules, the newly introduced penalties, and the differences between the previous and new approaches, with reference to provisions from the Income Tax Ordinance, 2001, Sales Tax Act, 1990, and official updates.

Watch Complete Video on Penalties and Adjustment Details on Ecommerce taxes in Pakistan:

Previous vs New Approach to E-Commerce Taxation

The Adjustability is taken from AFF's initial summary of budget 2025-26. This is still debatable as they have not provided from where this information is taken since its not in final finance bill copy 2025-26. Click here to download AFF's Budget Summary and click here for Finance Bill Copy.

From where we deduce it is adjustable is from following clause:

"Where the supplier is a registered person appearing on the Active Taxpayer List, the amount of sales tax withheld by the withholding agent shall be adjustable against the supplier’s output tax liability.”

New Penalties Introduced (2025)

1. Non-Deduction or Late Deposit of Tax by Banks & Couriers

📖 Clause: 12B

If a banking company, payment gateway, or courier service fails to:

• Deduct tax at the time of payment to a seller, or

• Deposit the tax deducted on digitally ordered goods or services,

📌 Penalty:
💸 100% of the tax amount involved.
This introduces full value liability, emphasizing that intermediaries are now key players in tax compliance.

2. Unregistered Sellers on Marketplaces

📖 Clause: 15A

If a seller of digitally ordered goods/services fails to register under the Sales Tax Act, 1990 and Income Tax Ordinance, 2001:

📌 Penalty:

• Rs. 500,000 for the first default

• Rs. 1,000,000 for every subsequent default

This clause forces sellers to legalize their operations, even if using third-party marketplaces.

3. Delayed Submission of Tax Statement (Section 165C)

📖 Clause: 1A

Any person failing to submit a Section 165C statement (income reporting of digital payments) within due date:

📌 Penalty:

• Rs. 50,000 if tax was paid but statement was late (within 90 days)

• Rs. 2,500 per day of delay in other cases

• Minimum penalty: Rs. 10,000

4. Marketplaces Hosting Unregistered Vendors

📖 Clause: 3B

If an online marketplace or courier service allows an unregistered vendor, they are liable.

📌 Penalty:

• Rs. 500,000 for first default

• Rs. 1,000,000 for subsequent defaults

• Minimum Rs. 10,000 (if no tax was due)

This shifts responsibility from sellers to platform providers and delivery partners.

Summary Table

Enforcement Shift: From Sellers to Enablers

These changes reflect a significant shift in the FBR’s enforcement strategy:

• From policing thousands of small sellers,

• To holding banks, couriers, and platforms accountable for tax compliance.

What E-Commerce Businesses Must Do Now

1. ✅ Register for Sales Tax & Income Tax via FBR and IRIS

2. 🏷️ Ensure seller listings are FBR-verified

3. 💳 Banks and Payment Gateways must deduct and remit applicable taxes

4. 📦 Couriers must collect sales tax on Cash-on-Delivery orders

5. 📂 Submit timely tax statements (165C, etc.)

Citations

• Sales Tax Act, 1990, Eleventh Schedule (2024 version)

• Finance Bill 2025 – Draft proposals and implementation notes

• Income Tax Ordinance, 2001 – Section 181 and 165C

• Penalty clauses sourced from shared images, presumed extracted from Finance Bill or budget summary (2025)

Closing Thought

Pakistan is aligning its tax policy with global e-commerce trends: platform accountability, automated tax collection, and tight registration enforcement. While the compliance burden rises, this could ultimately boost trust and transparency in the digital economy.