Do I need sales tax registration (STRN) to sell goods online, or is an NTN enough?

Selling goods online brings two separate registrations into play: income tax registration, which gives you an NTN, and sales tax registration, which gives you an STRN. Since the Finance Act, 2025, the Sales Tax Act names online sellers of goods directly, and most of them need both.

What does the law say?

Income tax registration. Section 181(1) of the Income Tax Ordinance requires every taxpayer, “including a person selling digitally ordered goods or services from within Pakistan using online marketplace or a courier service”, to apply for registration. Section 181(1A) then bars an online marketplace or courier service from letting any vendor use its platform for e-commerce unless the vendor is registered under the Ordinance.

Sales tax registration. Section 14(1A) of the Sales Tax Act requires every person, including a non-resident person, selling digitally ordered goods from within Pakistan through an online marketplace, website or software application to apply for registration. It names two exceptions:

1. a person running a cottage industry; and
2. retailers who are required to pay sales tax through their electricity bills under section 3(9).

Section 14(1B) then says an online marketplace or courier involved in supplying digitally ordered goods shall not allow any person to use their services for e-commerce “unless it holds NTN and in case sub-section (1A) of this section applies also holds sales tax registration”.

So the answer turns on whether you fall inside one of the two exceptions. If you do not, an NTN is not enough.

Who falls inside the exceptions?

Cottage industry. Section 2(5AB) defines a cottage industry as a manufacturing concern that meets every one of these conditions:

Condition	Text of section 2(5AB)
(a)	does not have an industrial gas or electricity connection
(b)	is located in a residential area
(c)	does not have a total labour force of more than ten workers
(d)	annual turnover from all supplies does not exceed eight million rupees

It must be a manufacturing concern. A person who buys finished goods and resells them online is not manufacturing, so the cottage industry exception does not fit a pure reseller on the text.

Retailers paying through electricity bills. Section 3(9) charges sales tax from retailers, other than Tier-1 retailers, through their monthly electricity bills. The exception in section 14(1A) covers retailers “who are required to pay sales tax through electricity bills” under that sub-section. The Act does not say how a seller who trades only online, with no shop electricity connection, is treated under this exception. That point is not settled by the text we hold.

How does it work in practice?

Section 3(3)(c) puts the duty to collect and pay sales tax on digitally ordered goods on the payment intermediary, when the buyer pays digitally, and on the courier, when goods are sent cash on delivery. The rate is in S. No. 8 of the Eleventh Schedule: 2% of the gross value of supplies, withheld by payment intermediaries and couriers from persons supplying digitally ordered goods from within Pakistan through an online marketplace, website or software application.

Section 3(7A) says that this withheld tax is the final discharge of sales tax liability on digitally ordered goods for two groups: a cottage industry as defined in section 2(5AB), and retailers other than Tier-1 retailers. For other registered sellers the Act does not state in section 3(7A) that the withheld amount ends their liability.

Worked example (illustrative figures)

Three sellers, each selling through an online marketplace:

• Sana, Multan. Stitches embroidered shawls at home with three helpers, domestic electricity only, annual turnover Rs. 5,000,000. She is a manufacturing concern meeting all four conditions of section 2(5AB). Section 14(1A) does not require her to register for sales tax. She still needs income tax registration under section 181.
• Bilal, Karachi. Buys phone covers in bulk and resells them online. He does not manufacture, so the cottage industry exception does not apply. Unless he is a retailer required to pay through his electricity bill, section 14(1A) requires him to register.
• Hina, Faisalabad. Makes bedsheets with a staff of 14. She fails condition (c), more than ten workers, so she is not a cottage industry and must register.

For Sana, suppose a month’s cash on delivery orders total Rs. 150,000. The courier withholds sales tax at 2%: Rs. 150,000 x 2% = Rs. 3,000. Under section 3(7A) that Rs. 3,000 is her final discharge of sales tax on those supplies.

What if …?

What if I sell services, not goods? Section 14(1A) speaks of digitally ordered goods. Services are largely taxed under provincial sales tax laws, which are outside this corpus.

What if I also have a physical shop? The shop’s position under section 3(9) and the Tier-1 retailer definition matters. This is covered on a separate page.

What if my cottage industry turnover crosses Rs. 8 million? Condition (d) is no longer met, so the cottage industry exception in section 14(1A) no longer applies on the text.

Common mistakes

• Treating the NTN as covering sales tax. Section 181 and section 14 are separate registrations under separate laws.
• Calling any home business a cottage industry. Section 2(5AB) requires a manufacturing concern and all four conditions together.
• Assuming the marketplace will sort it out. Section 14(1B) makes the marketplace or courier refuse unregistered sellers. It does not register them. S. No. 1B of the section 33 Table sets a penalty of five lac rupees for the first default and one million rupees for each later default on a marketplace or courier that allows unregistered persons.

What to check in the official text

Read section 14(1A) and (1B) and the definition of cottage industry in section 2(5AB) of the Sales Tax Act as amended to 30 June 2026, then section 3(3)(c), 3(7A) and 3(9). Confirm the 2% in S. No. 8 of the Eleventh Schedule. Section 14(1A) says registration is made “in the prescribed form and in the prescribed manner”, so the procedure sits in rules and FBR portal steps that are not covered here.