The Federal Board of Revenue (FBR) on Wednesday, has introduced a new system to make tax collection on e-commerce easier and more transparent. Under this system, sales tax on goods ordered online will now be deducted at the source by intermediaries, such as payment platforms, courier companies, and online marketplaces. The FBR has also released a detailed user manual to guide stakeholders on how to implement this change efficiently.
This responsibility falls on intermediaries (withholding agent) such as payment intermediaries, courier companies & online marketplaces. This manual is intended for Payment Intermediaries, Courier Companies, Online Marketplaces, and other stakeholders responsible for withholding and reporting sales tax on digitally ordered goods.
According to the FBR, the system automatically calculates the tax as a percentage of the invoice submitted by the supplier. The manual provides step-by-step instructions for creating e-payments, generating Payment Slip IDs (PSID) and Computerized Payment Receipts (CPR), submitting monthly withholding statements, and claiming admissible sales tax credits.
Monthly Reporting
Payment intermediaries and courier services are required to submit monthly withholding statements that reflect only the payments they have handled. Meanwhile, online marketplaces will submit statements covering all transactions, including those processed through payment intermediaries and courier companies. This ensures a complete and consistent record of all sales tax withheld across the e-commerce ecosystem.
FBR’s Aim
The new withholding system aims to ensure accurate and timely sales tax collection on digitally ordered goods. Payment intermediaries, courier companies, and online marketplaces are now designated as “withholding agents,” responsible for deducting the tax from payments made to suppliers and transferring it directly to the FBR.
The FBR says the move is intended to simplify tax compliance, improve transparency, and empower stakeholders to manage their tax obligations accurately. By streamlining reporting through the IRIS system, the government hopes to foster a reliable and well-coordinated e-commerce taxation framework.
