Is tax deducted when customers pay me through JazzCash, Easypaisa or a direct bank transfer?

The law reaches wallet and bank payments in principle, but it does not clearly say whether it reaches a customer sending money straight to your personal account after ordering in a chat. Banks and financial institutions can be payment intermediaries, and bank transfers are digital means. The unsettled part is whether such a sale runs “through locally operated e-commerce platforms”.

What does the law say?

The collection rule. Section 153(2A)(i) of the Income Tax Ordinance requires “every payment intermediary at the time of processing payment through digital means, on behalf of a seller of digitally ordered goods or services through locally operated e-commerce platforms (including websites)” to collect tax from the gross amount payable to the seller. For tax year 2027 the rate in Division IVA of Part I of the First Schedule is 1% of the gross amount paid or payable through digital means or banking channels by a payment intermediary.

Who is a payment intermediary. Section 153(7) defines it as any third party entity, including a banking company, financial institution, licensed foreign exchange company or payment gateway, that facilitates the transfer of funds or payment instructions “to enable, process, route or settle payments in a financial transaction, without being the ultimate source or recipient of the payment”. A bank or a wallet provider that moves money from a buyer to a seller fits the first part of that description.

What digital means covers. Section 2 defines digital means to include online portals or platforms for digital payments, online interbank fund transfer services, over the counter digital payment services, and card payments by point of sale terminal, QR code, mobile device, ATM or kiosk.

What e-commerce covers. Section 2 defines e-commerce as the sale or purchase of goods and services over computer networks by methods designed for receiving or placing orders “either through websites, mobile applications or online marketplace having digital ordering features”.

The charge on the seller. Section 6A(1) imposes the tax on every person who receives payment for digitally ordered goods or services delivered from within Pakistan “using locally operated online platforms including online marketplace or websites”.

Where is the text unclear?

Four conditions have to line up for section 153(2A)(i) to apply, and the text does not say how each one works for a direct transfer:

1. “On behalf of a seller”. When a buyer sends money from a wallet to your personal account, the provider is carrying out the buyer’s instruction. The text does not say whether that is processing a payment on the seller’s behalf.
2. “Locally operated”. The phrase is not defined in the Ordinance text held here. It is not stated whether a social media or messaging app counts as a locally operated e-commerce platform.
3. “Digitally ordered”. The phrase is also not defined. An order placed in a chat message is digital in a loose sense, but the Ordinance does not say so.
4. Knowledge of the intermediary. A bank moving an ordinary transfer may have no information that it relates to an online sale. The text does not deal with this.

This page does not resolve these points. They are questions for FBR guidance or a decided case, neither of which is in the texts held here.

Worked example (illustrative figures)

Hina sells handmade jewellery through an Instagram page from Peshawar. In October 2026, in tax year 2027, buyers paid her Rs. 150,000 by mobile wallet and Rs. 50,000 by bank transfer to her IBAN.

Step 1, if both payments were treated as processed by a payment intermediary under section 153(2A)(i): Rs. 150,000 x 1% = Rs. 1,500, and Rs. 50,000 x 1% = Rs. 500.

Step 2, total: Rs. 1,500 + Rs. 500 = Rs. 2,000.

Step 3, if no intermediary treats the transfers as e-commerce payments, nothing is deducted at source. Whether Hina still owes tax under section 6A on these sales then depends on the same unclear conditions above.

The amounts are made up. The 1% rate is the tax year 2027 rate in Division IVA.

What about sales tax?

Section 3(3)(c) of the Sales Tax Act makes a payment intermediary, including a banking company or financial institution, liable to collect and pay sales tax on digitally ordered taxable goods supplied “by online market place, website and software application from within Pakistan” where the payment is made digitally. The same questions arise: the Act does not say whether a sale arranged on a social media app counts as a supply by a “software application”. The rate is set in serial number 8 of the Eleventh Schedule.

Common mistakes

• Assuming wallets are outside the law. Banks and financial institutions are named in the definition of payment intermediary, and interbank transfers are named in digital means.
• Assuming every transfer is caught. Section 153(2A)(i) has further conditions, and the text does not clearly apply them to direct personal transfers.
• Reading “no deduction” as “no tax”. Section 6A places the charge on the seller who receives the payment.

What to check in the official text

Read section 153(2A) and (7), section 6A(1), and the definitions of digital means and e-commerce in section 2 of the Income Tax Ordinance as amended to 30 June 2026. For sales tax, read section 3(3)(c) of the Sales Tax Act, 1990. Look for any FBR notification or clarification on wallet and social commerce payments, which is not part of the texts held here.