Banks Request Delay in Tax Deductions for E-commerce Operators

Commercial banks have requested a temporary deferral in the implementation of tax deductions under the government’s new policy on e-commerce gateway operators and merchants.

Lack of Mechanism for Automated Tax

According to banking sector sources, “commercial banks are not deducting any tax from e-commerce operators and merchants because of absence of any mechanism for automated tax deduction.” The current lack of an automated system is making it difficult for banks to comply with the new tax rules.

Government’s New Tax Policy on Digital Payments

In the recent federal budget, the government introduced taxes ranging from 2% to 5% on digital payments made through local and foreign e-commerce platforms. This move was aimed at generating additional revenue. However, taxes were removed on foreign online sellers and advertisements on social media.

Banks Seek SBP Support via PBA

Officials from various banks have approached the State Bank of Pakistan (SBP) through the Pakistan Banks Association (PBA), requesting a delay in enforcing the tax deductions until a proper system is in place.

E-commerce Companies May Collect Taxes Themselves

“It is possible that an e-commerce company may collect taxes from their customers,” said a banking official. However, banks currently lack the capacity to deduct taxes from e-commerce payments.

Rapid Growth in E-commerce Activity

As per SBP data, around 10,000 e-commerce operators are registered with banks. In Q3 of FY25, more than 213 million online transactions were recorded, marking a 40% growth in volume and a 34% increase in value, amounting to Rs. 258 billion.