As Pakistan prepares its fiscal roadmap for 2025–26, the Federal Board of Revenue (FBR) is actively exploring new strategies to regulate and tax the booming online shopping sector.
With e-commerce experiencing rapid growth, particularly in major cities among middle- and high-income groups, the government sees a significant untapped revenue source within digital retail.
According to officials familiar with the matter, the FBR is working on a proposal to impose General Sales Tax (GST) on goods purchased through online shopping platforms, especially those paid via cash-on-delivery. Under one proposal, a 3% GST would be deducted by the delivery agent on behalf of the FBR during cash transactions, while the remaining 15% GST would be charged by the product’s manufacturer and added to the overall price.
Additionally, the FBR is reviewing methods to tax online transactions made using debit and credit cards. While a Federal Excise Duty (FED) already applies to international card-based payments, there is currently no such duty on local e-commerce purchases. The revenue authority believes closing this gap could help broaden the national tax base.
A recent study conducted by the FBR highlighted the exponential rise of online shopping across urban Pakistan, underscoring the need for structured taxation in this sector. As part of its plan, the FBR intends to introduce legislative amendments requiring all e-commerce platforms—whether they hold inventory or function purely as marketplaces—to collect and remit sales tax to the government.
However, tax analysts have raised concerns about the impact of such policies. They argue that aggressive taxation on online shopping could stifle the sector’s growth just as it gains momentum. These experts warn that imposing taxes prematurely might discourage small businesses and tech startups from investing in the e-commerce space.
Despite criticism, the FBR maintains that now is the right time to integrate online shopping into the formal tax framework. Officials argue that delaying tax regulation will only complicate future compliance, making it harder to bring e-commerce businesses and consumers into the fold.
As online shopping continues to evolve, the FBR appears determined to ensure the sector contributes fairly to Pakistan’s economy.