Islamabad Ride sharing services ( InDrive, Yango) to be Taxed

ISLAMABAD: The federal government is reportedly preparing to introduce a 4% sales tax on ride-hailing services operating within Islamabad Capital Territory (ICT) as part of the Fiscal Year 2025-26 budget.

At present, ride-hailing services such as InDrive, Careem, Bykea, Jugnoo, and Yango operate in Islamabad without any local sales tax obligations. This contrasts with the provinces, where tax laws already apply to such services.

Punjab, Sindh, and Khyber Pakhtunkhwa currently impose a 5% sales tax on similar services through their respective provincial revenue authorities.

Sources revealed that the FBR had initially floated the same tax proposal during the current fiscal year. However, it was dropped from the final finance bill “at the eleventh hour.”

The idea, however, appears to be back on the table as the FBR looks to broaden the tax base under the Islamabad Capital Territory (Tax on Services) Ordinance, 2001. This ordinance already includes numerous services like hotels, IT services, and marriage halls.

Among the services expected to be affected, InDrive currently holds around 60% of the domestic ride-hailing market share. This makes it the dominant player and a significant stakeholder in the upcoming policy shift.

In addition to targeting ride-hailing platforms, the FBR is also considering changes to the withholding tax regime. A potential increase in withholding tax rates on e-commerce platforms is being reviewed for the upcoming budget.

If approved, the new sales tax could bring Islamabad in line with provincial practices and generate additional revenue. However, it may also impact ride fares and user affordability in the federal territory.