Islamabad 6 August: The Federal Board of Revenue (FBR) has implemented significant changes to Pakistan’s e-commerce and export taxation framework, making sales tax applicable to all online transactions, including cash-on-delivery (COD) purchases.
Under the newly amended Sales Tax Rules, 2006, the FBR has made it mandatory for digital platforms, courier services, and payment intermediaries to deduct sales tax at the source of every transaction. This move aims to plug revenue leakages from the rapidly growing online retail sector.
All entities involved in online transactions must now comply with monthly filings of tax returns using STR-34, STR-35, and STR-36 forms. In addition, they are required to issue sales tax deduction certificates to vendors for each transaction.
According to FBR officials, the new mechanism is designed to ensure transparency and traceability in e-commerce sales, which have often gone untaxed under previous rules. The application of sales tax to COD transactions is particularly significant, as this payment method accounts for the bulk of online retail activity in Pakistan.
Meanwhile, the FBR has also revised the Export Facilitation Scheme. A key reform under the update includes the replacement of bank guarantees with insurance-backed options, providing greater ease for exporters while maintaining financial safeguards for the state.
Additionally, the FBR has removed cotton and related textile products from the tax-exempt list, bringing them under the general sales tax regime. The move is expected to generate additional revenue and align with broader policy reforms aimed at expanding the tax base.
Industry stakeholders are being urged to review the updated compliance requirements and adjust their accounting and invoicing systems accordingly. The FBR has indicated that non-compliance may result in penalties or suspension of business registrations.
The new rules are now in effect, and businesses involved in digital sales, logistics, or payments have been directed to align with the changes immediately.
