FBR Introduces Tax Rules for E-commerce Sellers

Islamabad, August 5, 2025, 02:30 PM PKT — The Federal Board of Revenue (FBR) has launched an aggressive overhaul, introducing new procedures via Income Tax Circular No. 01 and Sales Tax Circular No. 02 to regulate e-commerce sellers and tax digital transactions, aiming to bring the retail sector under the tax net, per official data. All payments for digitally ordered goods or services—via online marketplaces (OMPs) or websites—now face taxation under Section 6A, with payment intermediaries (banks, financial institutions, forex dealers, digital gateways) withholding 1% tax, and couriers deducting 2% on cash-on-delivery (CoD) transactions, driving a shift to a cashless economy.

This tax, treated as final on income from domestic and export sales, mandates monthly deposits and statements from intermediaries and couriers, while e-commerce sellers must register for income tax, with OMPs and couriers barred from serving unregistered vendors, facing penalties for non-compliance. CoD vendors fall under courier tax collection and reporting, and sales tax is final for cottage industries and non-tier-1 retailers, with others adjusting it against output tax. Amendments to Sections 14(1A) and 14(1B) compel all e-commerce vendors, including non-residents, to register and comply, with monthly statements from OMPs, intermediaries, and couriers. Web context on tax reforms shows implementation struggles, while posts found on X reflect concern and resistance—some fear business costs, others question enforcement. Critically, the narrative of “tax inclusion” may mask compliance challenges—web data hints at past failures, and X sentiment suggests distrust in effective execution, pointing to potential hurdles.