Senate Panel Approves E-Commerce Tax in Finance Bill 2025–26

ISLAMABAD: The Senate Standing Committee on Finance and Revenue has recommended reducing the sales tax on stationery items from 10% to zero, while also endorsing a proposal to impose sales tax on e-commerce transactions.

The committee held its third consecutive session on the Finance Bill 2025–26 under the chairmanship of Senator Saleem Mandviwalla. The session was part of the ongoing review process for the upcoming federal budget and was attended by Federal Minister for Finance and Revenue Muhammad Aurangzeb, Minister of State for Finance Bilal Azhar Kiyani, FBR Chairman Rashid Mahmood Langrial, and senior officials from relevant departments.

Opening discussions on the sales tax provisions, the committee proposed major tax reforms, with a key recommendation to eliminate the 10% sales tax on stationery items. The move follows appeals from the Stationery Association, which highlighted the burden on students and small businesses.

In a significant development, the committee approved the imposition of sales tax on e-commerce goods. FBR Chairman Langrial clarified that while consumers pay sales tax during online purchases, the collected amount is often not deposited with the Federal Board of Revenue. To ensure compliance, courier services will now act as collection agents, as they hold the seller’s invoice data.

However, the proposed sales tax will not apply to services offered locally. The Finance Bill 2025–26 mandates that all digital vendors, including non-resident businesses, must register with the FBR if they sell goods online through marketplaces, websites, or mobile apps targeting Pakistani consumers.

The committee also reviewed enforcement measures against unregistered entities engaged in digital sales. Concerns were raised regarding the potential impact on small-scale and occasional online sellers. In response, the FBR Chairman assured that housewives and individuals conducting one-time transactions would be exempt from mandatory registration requirements.