Don't wait until the last minute to file Tax Returns! Use coupon code EarlyBird on our store for 20% off on all of our services. Valid through July 31, 2026. Dismiss

Do you know?

Registering a 2001cc to 2500cc luxury vehicle incurs a 7% tax for Active Filers, but a staggering 21% tax for Non-Filers. • Importing pharmaceutical products carries an 8% tax for Non-Filers, which is exactly double the 4% rate applied to Active Taxpayers. • Winning a prize bond or crossword puzzle means you lose 15% to taxes as an Active Filer, but a massive 30% if you are a Non-Filer. • Payments made to non-resident sportspersons incur a 15% tax if they are on the ATL, and a massive 30% if they are non-ATL. • Purchasing a 1601cc to 1800cc vehicle will cost Non-Filers a 9% tax, which is three times the 3% rate given to Active Filers. • Selling rice, cotton seed, or edible oils comes with a low 1.5% tax for Filers, but a 3% tax for Non-Filers. • Profits on debt from mutual funds deriving 50% or more income from debt carry a huge 50% tax for Non-Filers, compared to 25% for Filers. • Cash withdrawals by a person whose name does not appear on the Active Taxpayers’ List are hit with an automatic 0.8% advance tax. • Dividends from Real Estate Investment Trusts (REITs) and general companies cost Active Filers 15% in tax, but Non-Filers lose a massive 30%. • Registering a 1000cc motor vehicle costs Filers just 1% in tax, while Non-Filers are penalized with a 3% tax. • Commercial importers bringing in Part-III items are hit with a 12% tax rate if they are Non-Filers, compared to only 6% for Active Filers. • Commercial importers of Part-II goods face a 3.5% withholding tax if they are Filers, but the rate doubles to 7% for Non-Filers. • Buying a high-end 2501cc to 3000cc vehicle leaves Filers with a 9% tax bill, but absolutely punishes Non-Filers with a massive 27% tax rate. • Active Filers importing CKD kits for Electric Vehicles pay a minimal 1% tax, whereas Non-Filers pay double at 2%. • Providing IT and IT-enabled services costs Active Taxpayers just 4% in withholding tax, while Non-Filers must pay 8%. • The withholding tax on banking and financial institution profits is set at 20% for those on the Active Taxpayers’ List, but jumps to 40% for those off the list. • Buyers of 1301cc to 1600cc cars pay a 2% advance tax if they are Filers, but Non-Filers pay exactly triple at 6%. • The sale of petroleum products is taxed at 12% for Filers and exactly double that at 24% for Non-Filers. • Capital gains arising on the disposal of certain debt securities are taxed at 15% for Filers, but double to 30% for Non-Filers. • Companies generating rental income from immovable property pay a 15% tax if they are Active Filers, but face a 30% rate as Non-Filers. • Salaries under Rs. 600,000 are completely tax-free, maintaining a 0% rate regardless of your taxpayer status. • Winning a raffle, lottery, or sales promotion prize costs Non-Filers a whopping 40% in tax, compared to 20% for Filers. • Pensions under 10 million rupees remain 100% tax-exempt for everyone, no matter what your filing status is. • If you receive dividends from Independent Power Purchasers (IPPs), Filers pay a 7.5% tax while Non-Filers surrender 15%. • Importing basic goods from Part-I of the Twelfth Schedule costs Active Taxpayers just 1% in tax, while Non-Filers have to pay 2%. • Payments to electronic and print media for advertising services are taxed at just 1.5% for Active Taxpayers, compared to 3% for Non-Filers. • Registering a 2001cc to 2500cc luxury vehicle incurs a 7% tax for Active Filers, but a staggering 21% tax for Non-Filers. • Importing pharmaceutical products carries an 8% tax for Non-Filers, which is exactly double the 4% rate applied to Active Taxpayers. • Winning a prize bond or crossword puzzle means you lose 15% to taxes as an Active Filer, but a massive 30% if you are a Non-Filer. • Payments made to non-resident sportspersons incur a 15% tax if they are on the ATL, and a massive 30% if they are non-ATL. • Purchasing a 1601cc to 1800cc vehicle will cost Non-Filers a 9% tax, which is three times the 3% rate given to Active Filers. • Selling rice, cotton seed, or edible oils comes with a low 1.5% tax for Filers, but a 3% tax for Non-Filers. • Profits on debt from mutual funds deriving 50% or more income from debt carry a huge 50% tax for Non-Filers, compared to 25% for Filers. • Cash withdrawals by a person whose name does not appear on the Active Taxpayers’ List are hit with an automatic 0.8% advance tax. • Dividends from Real Estate Investment Trusts (REITs) and general companies cost Active Filers 15% in tax, but Non-Filers lose a massive 30%. • Registering a 1000cc motor vehicle costs Filers just 1% in tax, while Non-Filers are penalized with a 3% tax. • Commercial importers bringing in Part-III items are hit with a 12% tax rate if they are Non-Filers, compared to only 6% for Active Filers. • Commercial importers of Part-II goods face a 3.5% withholding tax if they are Filers, but the rate doubles to 7% for Non-Filers. • Buying a high-end 2501cc to 3000cc vehicle leaves Filers with a 9% tax bill, but absolutely punishes Non-Filers with a massive 27% tax rate. • Active Filers importing CKD kits for Electric Vehicles pay a minimal 1% tax, whereas Non-Filers pay double at 2%. • Providing IT and IT-enabled services costs Active Taxpayers just 4% in withholding tax, while Non-Filers must pay 8%. • The withholding tax on banking and financial institution profits is set at 20% for those on the Active Taxpayers’ List, but jumps to 40% for those off the list. • Buyers of 1301cc to 1600cc cars pay a 2% advance tax if they are Filers, but Non-Filers pay exactly triple at 6%. • The sale of petroleum products is taxed at 12% for Filers and exactly double that at 24% for Non-Filers. • Capital gains arising on the disposal of certain debt securities are taxed at 15% for Filers, but double to 30% for Non-Filers. • Companies generating rental income from immovable property pay a 15% tax if they are Active Filers, but face a 30% rate as Non-Filers. • Salaries under Rs. 600,000 are completely tax-free, maintaining a 0% rate regardless of your taxpayer status. • Winning a raffle, lottery, or sales promotion prize costs Non-Filers a whopping 40% in tax, compared to 20% for Filers. • Pensions under 10 million rupees remain 100% tax-exempt for everyone, no matter what your filing status is. • If you receive dividends from Independent Power Purchasers (IPPs), Filers pay a 7.5% tax while Non-Filers surrender 15%. • Importing basic goods from Part-I of the Twelfth Schedule costs Active Taxpayers just 1% in tax, while Non-Filers have to pay 2%. • Payments to electronic and print media for advertising services are taxed at just 1.5% for Active Taxpayers, compared to 3% for Non-Filers. •

₨ 3,600

Do you know?

Cash withdrawals by a person whose name does not appear on the Active Taxpayers’ List are hit with an automatic 0.8% advance tax. • Profits on debt from mutual funds deriving 50% or more income from debt carry a huge 50% tax for Non-Filers, compared to 25% for Filers. • Providing IT and IT-enabled services costs Active Taxpayers just 4% in withholding tax, while Non-Filers must pay 8%. • If you receive dividends from Independent Power Purchasers (IPPs), Filers pay a 7.5% tax while Non-Filers surrender 15%. • Registering a 2001cc to 2500cc luxury vehicle incurs a 7% tax for Active Filers, but a staggering 21% tax for Non-Filers. • Pensions under 10 million rupees remain 100% tax-exempt for everyone, no matter what your filing status is. • Payments to electronic and print media for advertising services are taxed at just 1.5% for Active Taxpayers, compared to 3% for Non-Filers. • Selling rice, cotton seed, or edible oils comes with a low 1.5% tax for Filers, but a 3% tax for Non-Filers. • Registering a 1000cc motor vehicle costs Filers just 1% in tax, while Non-Filers are penalized with a 3% tax. • Winning a raffle, lottery, or sales promotion prize costs Non-Filers a whopping 40% in tax, compared to 20% for Filers. • Salaries under Rs. 600,000 are completely tax-free, maintaining a 0% rate regardless of your taxpayer status. • Buying a high-end 2501cc to 3000cc vehicle leaves Filers with a 9% tax bill, but absolutely punishes Non-Filers with a massive 27% tax rate. • Dividends from Real Estate Investment Trusts (REITs) and general companies cost Active Filers 15% in tax, but Non-Filers lose a massive 30%. • Importing basic goods from Part-I of the Twelfth Schedule costs Active Taxpayers just 1% in tax, while Non-Filers have to pay 2%. • Capital gains arising on the disposal of certain debt securities are taxed at 15% for Filers, but double to 30% for Non-Filers. • Companies generating rental income from immovable property pay a 15% tax if they are Active Filers, but face a 30% rate as Non-Filers. • Commercial importers of Part-II goods face a 3.5% withholding tax if they are Filers, but the rate doubles to 7% for Non-Filers. • The sale of petroleum products is taxed at 12% for Filers and exactly double that at 24% for Non-Filers. • The withholding tax on banking and financial institution profits is set at 20% for those on the Active Taxpayers’ List, but jumps to 40% for those off the list. • Payments made to non-resident sportspersons incur a 15% tax if they are on the ATL, and a massive 30% if they are non-ATL. • Active Filers importing CKD kits for Electric Vehicles pay a minimal 1% tax, whereas Non-Filers pay double at 2%. • Purchasing a 1601cc to 1800cc vehicle will cost Non-Filers a 9% tax, which is three times the 3% rate given to Active Filers. • Commercial importers bringing in Part-III items are hit with a 12% tax rate if they are Non-Filers, compared to only 6% for Active Filers. • Buyers of 1301cc to 1600cc cars pay a 2% advance tax if they are Filers, but Non-Filers pay exactly triple at 6%. • Importing pharmaceutical products carries an 8% tax for Non-Filers, which is exactly double the 4% rate applied to Active Taxpayers. • Winning a prize bond or crossword puzzle means you lose 15% to taxes as an Active Filer, but a massive 30% if you are a Non-Filer. • Cash withdrawals by a person whose name does not appear on the Active Taxpayers’ List are hit with an automatic 0.8% advance tax. • Profits on debt from mutual funds deriving 50% or more income from debt carry a huge 50% tax for Non-Filers, compared to 25% for Filers. • Providing IT and IT-enabled services costs Active Taxpayers just 4% in withholding tax, while Non-Filers must pay 8%. • If you receive dividends from Independent Power Purchasers (IPPs), Filers pay a 7.5% tax while Non-Filers surrender 15%. • Registering a 2001cc to 2500cc luxury vehicle incurs a 7% tax for Active Filers, but a staggering 21% tax for Non-Filers. • Pensions under 10 million rupees remain 100% tax-exempt for everyone, no matter what your filing status is. • Payments to electronic and print media for advertising services are taxed at just 1.5% for Active Taxpayers, compared to 3% for Non-Filers. • Selling rice, cotton seed, or edible oils comes with a low 1.5% tax for Filers, but a 3% tax for Non-Filers. • Registering a 1000cc motor vehicle costs Filers just 1% in tax, while Non-Filers are penalized with a 3% tax. • Winning a raffle, lottery, or sales promotion prize costs Non-Filers a whopping 40% in tax, compared to 20% for Filers. • Salaries under Rs. 600,000 are completely tax-free, maintaining a 0% rate regardless of your taxpayer status. • Buying a high-end 2501cc to 3000cc vehicle leaves Filers with a 9% tax bill, but absolutely punishes Non-Filers with a massive 27% tax rate. • Dividends from Real Estate Investment Trusts (REITs) and general companies cost Active Filers 15% in tax, but Non-Filers lose a massive 30%. • Importing basic goods from Part-I of the Twelfth Schedule costs Active Taxpayers just 1% in tax, while Non-Filers have to pay 2%. • Capital gains arising on the disposal of certain debt securities are taxed at 15% for Filers, but double to 30% for Non-Filers. • Companies generating rental income from immovable property pay a 15% tax if they are Active Filers, but face a 30% rate as Non-Filers. • Commercial importers of Part-II goods face a 3.5% withholding tax if they are Filers, but the rate doubles to 7% for Non-Filers. • The sale of petroleum products is taxed at 12% for Filers and exactly double that at 24% for Non-Filers. • The withholding tax on banking and financial institution profits is set at 20% for those on the Active Taxpayers’ List, but jumps to 40% for those off the list. • Payments made to non-resident sportspersons incur a 15% tax if they are on the ATL, and a massive 30% if they are non-ATL. • Active Filers importing CKD kits for Electric Vehicles pay a minimal 1% tax, whereas Non-Filers pay double at 2%. • Purchasing a 1601cc to 1800cc vehicle will cost Non-Filers a 9% tax, which is three times the 3% rate given to Active Filers. • Commercial importers bringing in Part-III items are hit with a 12% tax rate if they are Non-Filers, compared to only 6% for Active Filers. • Buyers of 1301cc to 1600cc cars pay a 2% advance tax if they are Filers, but Non-Filers pay exactly triple at 6%. • Importing pharmaceutical products carries an 8% tax for Non-Filers, which is exactly double the 4% rate applied to Active Taxpayers. • Winning a prize bond or crossword puzzle means you lose 15% to taxes as an Active Filer, but a massive 30% if you are a Non-Filer. •

Navigating Pakistan’s Digital Tax Landscape: Decoding the New 2% Sales Tax on Online Goods

The Finance Act 2025 introduces a 2% Sales Tax on digitally ordered goods in Pakistan, collected by payment gateways or couriers. This blog explains who it applies to, how it's collected, and what it means for registered vs. unregistered online sellers—including new STRN requirements.

Pakistan’s e-commerce sector is expanding rapidly, and the Finance Act, 2025 has added new layers to the tax framework governing it. One key change is the 2% Sales Tax (GST) on digitally ordered goods—raising questions for sellers, platforms, couriers, and customers alike. This guide breaks down who the tax applies to, how it’s collected, and what it means for both registered and unregistered online businesses.

The New 2% Sales Tax (GST) Explained: What It Is and Who Collects It

The Finance Act, 2025, has introduced a specific 2% Sales Tax (GST) on digitally ordered taxable goods. This is distinct from the Income Tax withholding often discussed in digital transactions.

What is it? This is a Sales Tax (or GST), specifically imposed at a rate of 2% of the gross value of supplies . It’s not a tax on the income of the seller, but rather a tax on the supply of goods.
Who collects it? The liability to collect and pay this tax falls upon the payment intermediary (such as a banking company, financial institution, licensed exchange company, or payment gateway) when the payment is made digitally. For goods supplied via Cash on Delivery (CoD), the courier delivering the goods is responsible for its collection. This mechanism is enshrined in Serial Number 8 of the Eleventh Schedule of the Sales Tax Act, 1990, as substituted by the Finance Act, 2025.
On what transactions? This 2% Sales Tax applies to the supply of digitally ordered taxable goods by online marketplaces, websites, and software applications from within Pakistan during the course of e-commerce.

Who ultimately pays? While the collection responsibility lies with the intermediary or courier, this tax is levied on the “gross value of supplies.” This means the sellers will typically factor this into their pricing, and it is ultimately borne by the customers as part of the total invoice amount.

Is This a Final Tax or an Adjustment? The Crucial Distinction

This is where understanding your Sales Tax Registration Number (STRN) status becomes vital:

For Cottage Industries and Non-Tier-1 Retailers: For cottage industries (as defined in the Act) and retailers other than Tier-1 retailers (who are generally smaller businesses and may not be fully integrated into the formal tax system), this 2% Sales Tax collected by the payment intermediary or courier serves as a final discharge of their sales tax liability. This means that for these specific categories, this 2% is their total sales tax obligation on these digitally ordered goods, simplifying their tax compliance.
For Other Registered Businesses (Active Taxpayers): If you are a registered business (an active taxpayer) that does not fall under the categories of cottage industry or non-Tier-1 retailer, you are generally required to charge 18% Sales Tax (or other applicable rates) on your taxable supplies.

The 2% collected by the intermediary or courier is a withholding of sales tax as per law. While the sources explicitly state that for cottage industries and non-Tier-1 retailers, this 2% is a final discharge, they do not explicitly detail the adjustment mechanism for other registered businesses. However, in common tax practice, such withholdings are generally adjustable against a business’s final sales tax liability.

Why Are Courier Companies Suddenly Asking for Your STRN?

Many online sellers, especially small retailers, have recently experienced couriers demanding their STRN, often leading to confusion or even unnecessary registration. This intensified scrutiny is a direct result of the Finance Act, 2025, which introduced new compliance obligations:

Mandatory Registration for Online Sellers: Under the newly inserted Section 14(1A) of the Sales Tax Act, 1990, every person (including non-residents) selling digitally ordered goods from within Pakistan through online marketplaces, websites, or software applications is now required to apply for sales tax registration, with specific exceptions for cottage industries and certain retailers already paying sales tax via electricity bills.
Platform/Courier Responsibility: Furthermore, the new Section 14(1B) places a significant burden on online marketplaces and courier services: they are prohibited from allowing any person to use their services to carry out e-commerce transactions unless that person holds an NTN and, if applicable, a sales tax registration.

This legal mandate means courier companies are compelled to verify the tax registration status of their online sellers. While the sources do not explicitly mention an “undertaking” in this context, the implication is that sellers not registered (and perhaps falling under the final tax categories) might be subject to specific procedures to comply with this new framework.

Who is Required to Register for Sales Tax (STRN)?

If you’re engaged in taxable supplies in Pakistan, you are generally required to register under the Sales Tax Act, 1990. The categories include:

Manufacturers (unless operating as a cottage industry).
Retailers (if liable to pay sales tax under the Act, excluding those whose sales tax is collected via electricity bills under Section 3(9)).
Importers.
Exporters intending to claim sales tax refunds on zero-rated supplies.
Wholesalers, dealers, or distributors.
Any person required to register under other Federal or Provincial laws for duties or taxes collected as if they were sales tax.

Specifically for online sales, as per the Finance Act, 2025, every person (including non-residents) selling digitally ordered goods from within Pakistan through online marketplaces, websites, or software applications is now required to register, unless they are a cottage industry or a retailer paying sales tax via electricity bills.

Key Takeaways for Online Sellers

The 2% Sales Tax is a new measure aimed at digital commerce, collected by payment intermediaries and couriers.
For small businesses (cottage industries and non-Tier-1 retailers), this 2% is a simplified, final Sales Tax liability.
For larger or other STRN-registered businesses, you still levy the standard 18% GST on your sales; the 2% is a withholding by the intermediary, which you would typically adjust against your overall liability.
The push from courier companies for your STRN is due to new legal obligations placed on them to ensure their vendors are tax-compliant.
If you are selling digitally ordered goods from within Pakistan, you are likely required to register for STRN unless you fall under specific exemptions.

Staying informed about these changes is essential for seamless business operations in Pakistan’s evolving digital economy.

Frequently Asked Questions (FAQs)

What is this 2% tax? Is it a Sales Tax or an Income Tax?
Answer: This 2% is a Sales Tax (GST), specifically applicable to digitally ordered goods supplied via e-commerce platforms. It is collected by payment intermediaries or courier services. It is different from the Income Tax (withholding tax) that may also apply to digital transactions, which has its own rates (e.g., 1% for digital payments, 2% for CoD in some cases).

Q2: Who ultimately bears the cost of this 2% Sales Tax?
Answer: While payment intermediaries and couriers are legally responsible for collecting this tax, it is levied on the “gross value of supplies.” In practice, sellers will likely include this cost in the final price of the goods, meaning the customer ultimately bears the economic burden.

Q3: Is this 2% tax a final payment, or do I still owe more Sales Tax?
Answer: This depends on your business’s registration status and category:

For cottage industries and retailers other than Tier-1 retailers, this 2% Sales Tax is a final discharge of their sales tax liability on these specific supplies. They do not need to pay additional sales tax.
For other registered businesses (active taxpayers), they are generally liable for 18% Sales Tax (or other applicable rates) on their taxable supplies. The 2% collected by the intermediary or courier is a withholding of sales tax. The specific mechanism for adjusting this withheld amount against a broader 18% liability for these businesses is not explicitly detailed in the law, but it is typically offset.

Q4: Why are couriers asking for my Sales Tax Registration Number (STRN)?
Answer: Courier companies are legally mandated by the Finance Act, 2025, (Section 14(1B)) to not allow vendors to use their services for e-commerce transactions unless the vendor holds an NTN and, if applicable, a sales tax registration. This is a compliance requirement for the couriers themselves.

Q5: Am I legally required to get an STRN if I sell online?
Answer: Yes, generally. Under the new Section 14(1A) of the Sales Tax Act, 1990, every person selling digitally ordered goods from within Pakistan through online platforms is now required to apply for sales tax registration, unless they are a cottage industry or a retailer required to pay sales tax through their electricity bills under Section 3(9).

Final Thoughts

The introduction of a 2% Sales Tax on digitally ordered goods under the Finance Act, 2025 marks a significant shift in Pakistan’s e-commerce tax environment. Whether you’re a small seller operating informally or a registered business with an STRN, understanding these changes is crucial to avoid compliance issues and pricing confusion. With enforcement now tied directly to payment gateways and courier services, the room for informal trade is narrowing.

As Pakistan’s digital economy grows, staying compliant, transparent, and informed is not just good business—it’s essential. If you’re unsure whether you need to register, consult a tax expert or use a trusted platform like TaxationPk to guide your next steps.

Syed Babar

Articles: 51

2 Comments

Saqib

August 15, 2025 / 2:59 pm Reply

Thanks, Sir, for enlightening the readers on this issue. I have one small question: as per law, is it correct that any retailer who does not fall under the Tier-1 category is automatically considered a non–Tier-1 retailer? There is a widespread misconception that the annual turnover threshold is PKR 8 million, but I have been unable to find any such provision in the law or in any SRO issued by the FBR. Could you please clarify this?
- Hayat Akbar
  
  August 15, 2025 / 5:58 pm Reply
  
  Yes you’re right. The 8 million is seemed to be miscalcuations by some tax-experts. Law says in addition to Tier-1, if the annual WHT under 236G and 236H exceeds 100,000 for any retailer, they will be classified as Tier-1.