Commercial banks lack preparations for deducting e-commerce tax deductions
Commercial banks have formally requested a delay in implementing the newly introduced tax deductions on digital payments made through e-commerce platforms, citing the absence of an automated mechanism to carry out the deductions.
No system in place for automated tax collection
Banking sector sources told media outlets that tax deductions on e-commerce operators and merchants have yet to begin because there is no operational system for automated collection. "Without a defined mechanism, banks are currently unable to comply with the new tax policy," one official noted.
New tax on digital transactions
In its latest federal budget, the government imposed a 2% to 5% tax on digital payments made via local and international e-commerce platforms. The move aims to boost tax revenue from Pakistan’s rapidly growing online economy. However, taxes on foreign-based sellers and social media advertisements were excluded.
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Banks turn to SBP for relief
Bank officials, through the Pakistan Banks Association (PBA), have approached the State Bank of Pakistan (SBP), urging it to delay implementation until an efficient tax deduction system is developed.
Shift in tax burden to e-commerce platforms?
One banking source suggested that, in the interim, e-commerce companies may choose to collect the taxes directly from customers, though banks currently lack the infrastructure to do so themselves.
E-commerce activity on the rise
According to SBP data, over 10,000 e-commerce operators are now linked with the banking system. In Q3 of FY2024–25 alone, the sector saw 213 million transactions, reflecting a 40% increase in volume and a 34% rise in value, totaling Rs. 258 billion.
Source: GTV