FBR bans unregistered sellers from online platforms: Here’s why!

ISLAMABAD: FBR has brought down the hammer on e-commerce sellers in a major update for the digital economy. The Federal Board of Revenue (FBR) has launched a tough crackdown on the e-commerce sector by making tax registration mandatory.

Under bold new reforms, unregistered online sellers have been formally outlawed, with banks, courier companies and online marketplaces ordered to immediately block their services. If you are selling online in the South Asian country and are not registered with the FBR, your days are numbered.

Under the new guidelines, a one percent tax will be levied on all digital payments made through banks, fintechs and gateways.

A two percent tax will be deducted by couriers on all cash-on-delivery (COD) orders, before you pay.

This aggressive enforcement comes under Sections 6A and 153(2A) of the Income Tax Ordinance, which has been updated as part of the FBR’s mission to crack down on the exploding digital market.

Under the new law, it is now illegal for any online marketplace or courier service to work with unregistered sellers. Non-compliance will lead to penalties, audits and shutdowns. Whether you are an aggregator, a mobile app, or an independent e-store, courier companies are now tax watchdogs. They will have to deduct tax, report every sale, and file monthly returns or face consequences.

The sales tax regime has also been tightened. Under Section 3(7A), tax collected on online sales will be treated as a final liability for small sellers with input tax credit not allowed.

Foreign businesses selling to Pakistani consumers are also no longer immune. The amendments to Section 14(1A) and 14(1B) now require every e-commerce entity, whether local or international, to register under Pakistan’s tax system.

Online platforms, payment processors, and courier services will now have to submit detailed monthly tax returns to the FBR, which will include a list of every transaction, payment, and seller.

The FBR’s drive is being hailed as the most aggressive move yet to bring the digital market into the tax net. Experts say it will either clean up the industry or create chaos for small sellers who are not prepared for the new system.