E-Commerce Tax: Banks Seek Delay in Tax Deduction

Islamabad 4 August: Commercial banks have requested the government to defer implementation of the newly introduced tax deduction policy on e-commerce gateway operators and merchants, citing a lack of automated systems to enforce the deductions.

Media reports claim that no tax is currently being deducted from e-commerce entities, as banks have yet to establish a mechanism for automated tax collection and remittance.

The government recently imposed several taxes on digital payments to boost revenue from the rapidly growing e-commerce sector. These include taxes on transactions processed by payment gateways and e-commerce merchants.

However, banking officials say it is technically unfeasible to roll out such a system overnight. “At this point, banks don’t have the infrastructure to automatically deduct taxes from e-commerce operators,” a senior banking source explained. “Until a framework is in place, some e-commerce companies may choose to collect taxes directly from customers.”

Industry experts warn that unless a proper compliance mechanism is introduced soon, the policy may lead to inconsistencies in tax collection and potential revenue shortfalls.

Negotiations between the banking sector and the Federal Board of Revenue (FBR) are ongoing, with banks urging a temporary relief period to avoid disruptions in digital commerce.