Sales Tax

Special Regime for Digitally delivered goods:

Concept

The supply of digitally ordered taxable goods by online market place, website and software application from within Pakistan during the course of e-commerce,

a. the liability to collect and pay tax shall be of payment intermediary including a banking company, a financial institution, licensed exchange company or payment gateway in case the payment is made digitally and of the courier delivering the goods where those are supplied on Cash on Delivery (CoD) basis

A comment on Finance Act 2025—I

b. Persons supplying digitally ordered goods from within Pakistan through online market place, website, software applications at the rate of 2% of gross value of supplies. This tax shall be the final tax in case of retailers other than Tier 1 retailers and supplies by cottage industry as defined in the law. For others, the remaining tax is to be paid by the supplier.

Retailers subject to 2% final sales tax

Following retailers who are not treated as Tier 1 retailers will be entitled to reduced rate of sales tax.

(a) a retailer not operating as a unit of a national or international chain of stores;

(b) a retailer not operating in an air-conditioned shopping mall, plaza or centre, excluding kiosks;

(c) a retailer whose cumulative electricity bill during the immediately preceding twelve consecutive months does not exceed Rupees twelve hundred thousand;

(d) a person not engaged in wholesaler-cum-retailer, engaged in bulk import and supply of consumer goods on wholesale basis to the retailers as well as on retail basis to the general body of the consumers

A comment on Finance Act 2025—II

(f) a retailer who has not acquired point of sale for accepting payment through debit or credit cards from banking companies or any other digital payment service provider authorized by State Bank of Pakistan;

(g)]a retailer whose deductible withholding tax under sections 236G or 236H of the Income Tax Ordinance, 2001(XLIX of 2001) during the immediately preceding twelve consecutive months do not exceed the threshold as may be specified by the Board through notification in the official Gazette; and

(h) any other person or class of persons as prescribed by the Board.

The definition as prescribed is not correct. A specific criterion may be laid down for people who are to be allowed the final tax regime for sale tax.

Cottage industry

“Cottage industry” means a manufacturing concern, which fulfils each of following conditions, namely:

(a) does not have an industrial gas or electricity connection;

(b) is located in a residential area;

(c) does not have a total labour force of more than ten workers; and

(d) annual turnover from all supplies does not exceed eight........

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