Pakistan’s Federal Board of Revenue (FBR) has set out tax-collection and reporting duties for online commerce under the Finance Act 2025. The official materials cited here describe a framework—not a separately branded consumer-facing platform. They distinguish income-tax withholding on sellers’ receipts from sales-tax collection on digitally ordered taxable goods. Who handles collection depends on the payment method and, for digital payments, the sales channel.
What changed—and what “new system” means
FBR’s circulars explain statutory responsibilities for collecting and reporting taxes on e-commerce transactions. They do not establish that FBR launched a named app or consumer-facing tax platform for online purchases. The practical change is the allocation of collection duties among payment intermediaries, marketplaces and couriers.
There are two separate tax tracks. Income-tax withholding applies to seller receipts under the income-tax rules explained in FBR Circular No. 01 of 2025-26. Sales-tax collection on digitally ordered taxable goods is addressed separately in Circular No. 02 of 2025-26. Do not treat an income-tax withholding percentage as a sales-tax rate.
Who collects on an online order?
The collection route depends on whether the buyer pays digitally or cash on delivery (COD), and whether the seller uses a direct e-store or a marketplace.
| Transaction | Income-tax withholding collector | Sales-tax collection route |
|---|---|---|
| Direct e-store, digital payment | The acquiring bank, under FBR’s explanation of the 2025 income-tax rules. | FBR’s 2025-26 budget summary describes payment intermediaries as responsible for collection on digitally ordered taxable goods paid digitally. The summary is a proposal summary, not a substitute for the later explanatory circular or current rate card. |
| Marketplace sale, digital payment | The bank or financial institution handling the final settlement between the marketplace and seller, under FBR’s income-tax circular. | FBR’s budget summary describes payment intermediaries as responsible for collection on digitally ordered taxable goods paid digitally. |
| COD order | The courier or aggregator that delivers the goods and collects cash from the buyer, under FBR’s income-tax circular. | FBR’s budget summary describes couriers as responsible for sales-tax collection on COD orders for digitally ordered taxable goods. |
These descriptions identify the responsible party in the transaction chain; they do not establish a universal checkout surcharge paid by every shopper. The income-tax withholding described by FBR is collected from seller receipts.
Income-tax withholding rates and seller obligations
FBR Circular No. 01 of 2025-26, dated 2 August 2025, explains income-tax withholding of 1% for digital payments and 2% for COD, calculated on gross receipts under the regime it describes. These are income-tax withholding rates, not sales-tax rates. For current rates and obligations, check the latest official rate card and any subsequent legislation or circulars.
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The circular also describes compliance duties for sellers and intermediaries:
- Sellers must register for income tax. Online marketplaces and couriers are barred from offering services to unregistered sellers.
- Intermediaries and couriers must collect tax in each seller’s name, remit it monthly and file prescribed statements.
For COD e-commerce orders, Circular No. 02 of 2025-26 clarifies a Rs. 200,000 cash transaction limit, applying the same limit described for retail outlets. Check FBR’s current materials before relying on this figure for a transaction.
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How sales tax fits in
Sales tax is a separate obligation from the income-tax withholding above. FBR’s Budget 2025-26 summary presented sales-tax collection by payment intermediaries for digital payments and by couriers for COD. It described a proposed increase in the sales-tax withholding rate from 1% to 2%. Because that document summarizes proposed budget measures, it should not be used alone to establish the current enacted rate. Consult the later FBR explanation and current rate card for the applicable position.
Is SWAPS the new online-purchase tax system?
Not on the evidence in FBR’s current withholding guidance. FBR says the Synchronized Withholding and Payment System (SWAPS) is under implementation. The guidance says that once operational, it will link with the State Bank of Pakistan’s RAAST instant-payment gateway and route certain withholding payments at the time of electronic transactions. It does not establish that SWAPS is the e-commerce framework described above or that SWAPS is already operational.
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Where to verify current rules
Rates, limits and obligations can change. FBR’s rate-card index lists a Tax Year 2027 card updated through 30 June 2026 under the Finance Act 2026; check the current card and any later official notices before acting.
Quick Recap
- FBR Circular No. 01 of 2025-26: income-tax amendments explained
- FBR Circular No. 02 of 2025-26: sales-tax amendments explained
- FBR Budget 2025-26 salient features
- FBR withholding-tax guidance, including SWAPS
- FBR withholding-tax rate cards
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