Karachi, June 11, 2025 – In a dramatic shake-up of Pakistan’s digital economy, the federal government has unleashed a sweeping new tax regime on digital transactions through e-commerce platforms as part of the Finance Bill 2025. The latest move targets the booming world of online sales, aiming to bring long-ignored digital commerce into the tax net.
According to amendments proposed to Section 153 of the Income Tax Ordinance, 2001, all digital transactions—whether processed via payment intermediaries or cash-on-delivery (CoD) couriers—will now face direct taxation. This unprecedented step is being seen as a bold attempt to rein in the largely untaxed sector of online business, which has exploded in volume in recent years.
Under the new law, payment intermediaries—including banks, financial institutions, and digital payment gateways—are now required to withhold income tax at the time of processing payments made on behalf of sellers for digitally ordered goods or services. Similarly, courier companies that handle CoD transactions for online sellers must also deduct tax from the gross amount, including sales tax, before handing over the payment to the seller.
The government has laid out specific tax rates for various digital transactions:
• Payments made via digital channels:
o Up to Rs10,000: 1% tax
o Rs10,001–20,000: 2% tax
o Above Rs20,000: 0.25% tax
• Cash-on-delivery transactions:
o Electronics and electrical goods: 0.25%
o Clothing and apparel: 2%
o Other goods: 1%
This targeted framework underscores the government’s focus on plugging revenue leakages from the fast-growing digital ecosystem. By capturing both electronic payments and CoD flows, the authorities aim to ensure no digital transaction escapes scrutiny.
Officials argue that the digital commerce boom must contribute its fair share to the national exchequer. “This tax on digital transactions is not just a fiscal tool—it’s a declaration that Pakistan’s tax system is evolving with its economy,” said a senior tax official.
Exemptions from double taxation are also provided: where tax is collected under this new sub-section, no further deduction is required under the general withholding rules. The law even defines the roles of “courier services” and “payment intermediaries” in detail, reflecting the government’s commitment to monitoring and regulating digital income streams more stringently.
This bold financial maneuver sends a clear message: digital transactions are no longer in the shadows—they are now squarely in the taxman’s crosshairs.