Banks Want Govt to Defer Tax Deductions on Ecommerce Operators

Commercial banks have sought a deferral of tax deduction under the new tax policy of the government on ecommerce gateway operators and merchants for a few months. Sources in the banking sector told ProPakistani that the commercial banks are not deducting any tax from e-commerce operators and merchant because of absence of any mechanism for automated tax dedication and deduction alike. The government imposed multiple taxes on digital payments for generating additional revenues from online trading through e-commerce payment operators including gateways and merchants of this sector. Banks could not develop any system overnight that deduct taxes from e-commerce operators, however, an e-commerce company may collect taxes from their customers, said an official privy to the matter. Source said that officials of banks approached the banking regulator through the platform of Pakistan Banks Association (PBA) seeking deferral of the taxes on the digital payments until banks came up with a mechanism for tax collection. Banks are working on development of the system but the withholding of tax through e-commerce companies seem challenging at the moment. The operator might collect taxes from their customers but banks did not build any capacity of deducting taxes from payment operators, yet, a banking official said. The government imposed taxes varying 2 to 5 percent on digital payments on local and foreign ecommerce platforms in the recent budget. It, however, removed taxes on foreign online sellers and advertisement on social media platforms. There are nearly 10,000 e-commerce operators registered with banks, according to the SBP, E-commerce activity surged during the quarter, with over 213 million online payments recorded, reflecting a remarkable 40 percent growth in volume and a 34 percent increase in value, reaching Rs. 258 billion in the third quarter of FY25.