The Senate Standing Committee on Finance and Revenue has put forth a key recommendation to reduce the sales tax on stationery items from 10 percent to zero. Concurrently, the committee has given its approval to a proposal for imposing sales tax on e-commerce items, marking significant adjustments in the nation’s taxation policy for the upcoming fiscal year.
The committee’s deliberations are part of its third consecutive session reviewing the Finance Bill 2025–26, presided over by Senator Saleem Mandviwalla. The session saw the participation of Federal Minister for Finance and Revenue Muhammad Aurangzeb, Minister of State for Finance Bilal Azhar Kiyani, Chairman FBR Rashid Mahmood Langrial, and other senior officials from relevant departments.
Key Recommendations on Sales Tax Provisions
Opening discussions on the Sales Tax provisions within the Finance Bill 2025–26, the committee proposed several notable reforms. A primary recommendation, following representations from the Stationery Association, was to reduce the sales tax on stationery items from 10 percent to zero. This aims to provide relief and support to the education and business sectors reliant on these essential goods.
In a move to capture revenue from the burgeoning digital economy, the committee also approved a proposal to impose sales tax on e-commerce items. FBR Chairman Rashid Mahmood Langrial clarified that while sales tax is technically collected from consumers in e-commerce transactions, it often fails to be deposited with the FBR. To address this leakage, Chairman Langrial elaborated that courier services will now be designated as sales tax collection agents, leveraging their access to the seller’s invoice to facilitate collection.
E-commerce Registration and Exemptions
The proposed Finance Bill mandates that all digital vendors, including non-resident businesses, must register in Pakistan if they sell goods digitally through online marketplaces, websites, or applications to consumers within the country. The committee thoroughly reviewed these new laws concerning registration for anyone engaged in online goods sales to Pakistani consumers.
Discussions also touched upon stringent enforcement actions against unregistered entities. However, concerns were raised by committee members regarding the potential impact on small-scale and one-time online sellers. Addressing these concerns, Chairman FBR assured the committee that measures would be put in place to protect individuals such as housewives or those conducting sporadic, one-time transactions, ensuring they would not be required to register under the new regime. It was also clarified that sales tax will not apply to services provided locally within e-commerce transactions.
These recommendations from the Senate committee indicate a strategic shift towards enhancing tax collection from the digital sector while attempting to alleviate the burden on certain essential goods and micro-scale sellers. The final shape of these proposals will be determined as the Finance Bill progresses through the legislative process.
