Sindh Increases Tax on Card Payments at Restaurants, Cafes [Updated]

Update Sindh Revenue Board (SRB) has denied rumors of imposing a 15 percent sales tax on services paid via debit and credit cards at hotels and restaurants. An SRB spokesperson said that the actual sales tax rate for such transactions remains at 8 percent.   The government of Sindh has reinstated a 15 percent service tax on debit and credit card payments at restaurants and cafes to address revenue shortfall. Previously, the provincial government had reduced the said tax to 8 percent. However, it has been increased to 15 percent once again. According to details, the Sindh Revenue Board has authorized 58 establishments in Karachi to apply the increased tax rate of 15 percent. The government has reinstated the higher tax to address revenue shortfall and improve tax compliance in the hospitality industry. Earlier, the tax was lowered to tempt consumers into spending more and support the hospitality industry amid the challenging economic situation. The increase in tax means that the customers will have to pay higher costs and could influence spending habits, leading to a decrease in sales. Revenue collection from card payments is a major contributor to the overall tax collection and will help address revenue gaps.