Government Imposes New Taxes on E-Commerce and Digital Services in Budget 2025-26

In the newly announced federal budget for the fiscal year 2025-26, the Pakistani government has proposed significant tax measures targeting online businesses and digital services. Finance Minister Muhammad Aurangzeb, in his budget speech, stated that e-commerce transactions will now be subject to taxation, including goods and services ordered digitally.

Under the new policy, individuals and companies operating through e-commerce platforms will be required to submit monthly transaction data and tax reports to the Federal Board of Revenue (FBR). The government has also proposed an 18% sales tax on online purchases.

Furthermore, the budget suggests increasing the tax rate on passive income such as interest earnings from 15% to 20%, although this will not apply to national savings schemes. Income derived from debt instruments will face a new 25% tax rate, while no changes have been made to the tax on dividends from shares.

These measures aim to bring the rapidly growing digital economy into the formal tax net and enhance revenue collection from previously under-taxed sectors.