What is the penalty for selling online without registering with FBR?

Two separate laws put a price on selling online without registering. The Income Tax Ordinance has a fixed penalty that grows after the first default. The Sales Tax Act has a penalty tied to the tax involved, and a criminal route if registration is delayed. A seller who should be registered under both can face both.

What does the law say?

Income tax registration. Section 181(1) of the Income Tax Ordinance says every taxpayer, “including a person selling digitally ordered goods or services from within Pakistan using online marketplace or a courier service”, shall apply for registration in the prescribed form and manner. Section 181(1A) adds that an online marketplace or courier service shall not let any vendor use its platform for e-commerce unless the vendor is registered under the Ordinance.

The income tax penalty. Section 182(1) makes a person who commits an offence in the Table liable to the penalty set against it. Entry 15A, added by the Finance Act, 2025, covers “any seller supplying digitally ordered goods and digitally delivered services through online marketplace” who is required to register under the Ordinance and fails to register. The penalty in column (3) is:

Default	Penalty under entry 15A
First default	Rs. 500,000
Every subsequent default	Rs. 1,000,000

Section 182(1) says this penalty is in addition to, and not in derogation of, any other punishment under the Ordinance or any other law.

Sales tax registration. Section 14(1A) of the Sales Tax Act requires every person, including a non-resident, selling digitally ordered goods from within Pakistan “through online marketplace, website or software application” to apply for registration. Two groups are left out: a person running a cottage industry, and retailers who pay sales tax through their electricity bills.

The sales tax penalty. Serial 7 of the Table in section 33 applies to a person required to apply for registration who fails to do so before making taxable supplies. The penalty is Rs. 50,000 or five per cent of the amount of tax involved, whichever is higher. A proviso adds that if the person fails to get registered within sixty days of starting taxable activity, the person is further liable, upon conviction by a Special Judge, to imprisonment of up to three years, or a fine of up to the amount of tax involved, or both.

How does it work in practice?

The two regimes are separate. Registering for income tax (an NTN, which for an individual is the CNIC under section 181(4)) does not by itself meet the sales tax registration duty in section 14(1A), and the reverse is also true.

The platforms are also pushed to check. Section 14(1B) of the Sales Tax Act says an online marketplace or courier shall not let any person use its services for e-commerce unless that person holds an NTN, and also holds sales tax registration where section 14(1A) applies. Serial 1B of the section 33 Table penalises a marketplace or courier that allows unregistered persons to use its services: five lac rupees for the first default and one million rupees for each subsequent default. In practice this means an unregistered seller may be refused service, apart from any penalty.

Both laws also let the department act on its own. Section 181(2) of the Ordinance lets the Commissioner register a taxpayer where the facts require it, and section 14(2A) of the Sales Tax Act lets the Commissioner compulsorily register a person liable to register, after giving an opportunity of being heard.

Worked example (illustrative figures)

Sana runs an online clothing store from Faisalabad, selling through a local marketplace and her own website. She has registered with neither income tax nor sales tax.

1. Income tax, first default. Entry 15A applies: Rs. 500,000.
2. Income tax, a later default. If a further default is established, entry 15A applies again at the higher figure: Rs. 1,000,000.
3. Income tax total on these two defaults: Rs. 500,000 + Rs. 1,000,000 = Rs. 1,500,000.
4. Sales tax. Suppose the sales tax involved on her unregistered supplies is found to be Rs. 1,400,000 (an invented figure). Five per cent of that is Rs. 1,400,000 x 5% = Rs. 70,000. That is higher than Rs. 50,000, so the serial 7 penalty is Rs. 70,000.
5. If the tax involved were only Rs. 600,000: Rs. 600,000 x 5% = Rs. 30,000. That is lower than Rs. 50,000, so the penalty would be Rs. 50,000.

These penalties sit on top of any tax found to be payable. They are not a substitute for it.

What if …?

What if I sell only through my own website, not a marketplace? Section 181(1) covers sellers using an online marketplace or a courier service, and section 14(1A) of the Sales Tax Act names websites expressly. The wording of entry 15A, however, refers to sellers “through online marketplace”. The Table does not say whether a website-only seller falls within entry 15A. That point is not settled by the text.

What if I run a cottage industry? Section 14(1A) of the Sales Tax Act excludes a person running a cottage industry from the online sales tax registration duty. That exclusion is in the Sales Tax Act only. Section 181 of the Ordinance has no matching exclusion.

What counts as a “subsequent default”? Entry 15A does not define how one default is separated from the next, for example by tax year or by notice. The Ordinance text held here does not settle it.

Common mistakes

• Treating an NTN as full compliance. The income tax and sales tax registration duties are separate, under section 181 of the Ordinance and section 14(1A) of the Sales Tax Act.
• Assuming the penalty replaces the tax. Section 182(1) says the penalty is in addition to any other punishment, and the sales tax penalty is measured against the tax involved, which remains due.
• Ignoring the sixty-day point. Serial 7 of the section 33 Table opens a criminal route, on conviction by a Special Judge, once registration is more than sixty days late.

What to check in the official text

Read section 181(1) and (1A) with entry 15A of the section 182 Table in the Income Tax Ordinance. In the Sales Tax Act, read section 14(1A), (1B) and (2A), then serials 1B and 7 of the section 33 Table in the source PDF, because the site text does not reproduce that table. The prescribed registration forms and procedure are set by rules not covered on this page.