Budget 2025-26 and Online Sellers: What the New E-commerce Tax Means for Your Store

Pakistan’s 2025-26 budget, presented on 10 June, puts e-commerce firmly in the tax net. The headline change for online sellers is a withholding tax on the value of goods and services ordered digitally, through websites, apps and marketplaces. It applies to digital payments and to cash-on-delivery orders.

We’re marketers, not tax advisers. Details have shifted during the budget debate, so confirm the final Finance Act and FBR notifications with your accountant.

What’s been reported

• Who collects it: banks, wallets and payment gateways deduct the tax on online payments. Courier companies collect it on COD orders before passing payment to sellers.
• Rates: reports describe rates between 0.25% and 2% depending on transaction size and payment method, with COD expected to be taxed at a higher rate than digital payments to encourage digital payments.
• Review: the commerce and IT ministries have formed a joint working group to propose changes to the e-commerce tax regime after concerns from the industry.

What it means for your store

• Margins: courier payouts and gateway settlements may arrive slightly lower. Update your pricing and margin calculations.
• COD vs prepaid: if COD is taxed more heavily, offering a small discount or free shipping for prepaid orders could make more sense than before.
• Registration: sellers will be pushed towards formal tax registration. Being registered can also help with marketplace onboarding and business banking.
• Records: keep clean monthly records of orders, refunds and courier deductions.

Marketing actions to consider

1. Test a prepaid incentive in your checkout and measure how many customers switch from COD.
2. Promote secure payment options (cards, wallets) clearly on product pages and at checkout.
3. Recalculate your target cost per order for ads, because each order now carries a small extra cost.