Courier and delivery services have become essential in Pakistan’s growing e-commerce and logistics landscape. From large multinational courier companies to small-scale food and parcel delivery startups, this sector has seen rapid expansion. With growth comes the responsibility of tax compliance, and courier/delivery service providers in Pakistan are subject to various taxes under both federal and provincial laws.
This article provides a comprehensive overview of the taxation of courier and delivery services in Pakistan, including income tax, sales tax on services, withholding tax, and other applicable levies imposed by FBR, PRA, SRB, KPRA, and BRA.
Nature of Courier and Delivery Services
Courier and delivery services include:
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Domestic and international parcel delivery
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Third-party logistics (3PL)
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E-commerce order fulfillment
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Food delivery (by apps or restaurant partners)
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Cash-on-delivery services
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Freight forwarding and express cargo
Under Pakistan’s tax regime, these are classified as taxable services, and the relevant tax implications apply accordingly.
Tax Authorities and Jurisdiction
1. Federal Board of Revenue (FBR)
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Income Tax
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Sales Tax on goods (e.g., sale of packaging, tracking equipment, logistics tools)
2. Provincial Revenue Authorities
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Sales Tax on Services, governed by the following:
| Province | Authority |
|---|---|
| Punjab | Punjab Revenue Authority (PRA) |
| Sindh | Sindh Revenue Board (SRB) |
| KPK | Khyber Pakhtunkhwa Revenue Authority (KPRA) |
| Balochistan | Balochistan Revenue Authority (BRA) |
Each provincial authority levies Sales Tax on Services provided or consumed within its jurisdiction.
Income Tax on Courier and Delivery Services
Applicability
Courier and logistics companies are treated as businesses or AOPs and taxed under the Income Tax Ordinance, 2001.
Key Provisions
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Companies: Taxed at 29% corporate tax (TY 2025)
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Individuals/AOPs: Progressive income tax slabs (up to 35%)
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Minimum tax applies under Section 113 on gross turnover
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Quarterly advance tax under Section 147 is applicable for companies
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Income from cash-on-delivery (COD) handling charges, delivery fees, and freight charges must be fully declared
Common Deductions Allowed
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Salaries and wages
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Fuel and vehicle maintenance
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Tracking and routing software costs
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Packaging materials
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Rent and utilities
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Insurance and depreciation of fleet assets
Sales Tax on Courier and Delivery Services
Classification as Taxable Services
Courier, freight, and delivery services are expressly taxable under the provincial sales tax laws. All courier companies must obtain a Sales Tax Registration Number (STRN) and charge Sales Tax on Services from customers.
| Province | Rate | Reference |
|---|---|---|
| Punjab (PRA) | 16% | Second Schedule, PRA Act 2012 |
| Sindh (SRB) | 13% | Notification No. 3-4/8/2013 |
| KPK (KPRA) | 15% | Schedule-II, KP Sales Tax Act 2013 |
| Balochistan (BRA) | 15% | BRA Notification |
Services include:
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Local courier service
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International delivery
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Freight forwarding
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Cash-on-delivery handling
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Third-party logistics (3PL)
Filing and Payment
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Monthly Sales Tax Returns must be filed by the 15th-18th of each month
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Tax is calculated on gross invoice value excluding exempt portions
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If the service spans multiple provinces, apportionment rules apply
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In some cases, reverse charge mechanism may apply (for services from outside Pakistan)
Input Tax Credit
Courier businesses can claim input tax credit on:
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Fuel (if GST paid)
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Office rent and utility bills
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Fleet maintenance services
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Software, packaging, and operational goods used in service delivery
Input tax must be proportionately claimed if both taxable and exempt services are offered.
Withholding Tax Requirements
Courier companies may also act as withholding agents under various sections of the Income Tax Ordinance, 2001.
As Service Providers
When a courier company provides services to large clients (e.g., banks, telecoms, e-commerce platforms), these clients may deduct withholding tax under:
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Section 153(1)(b) – Payment for services
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Withholding Rate: 8% for companies, 10% for individuals/AOPs
If courier companies are active taxpayers, they may be eligible for reduced rates.
As Withholding Agents
Courier companies themselves must deduct and deposit withholding tax when making payments such as:
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Salaries – Section 149
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Rent of warehouses or vehicles – Section 155
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Payments to contractors or agents – Section 153
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Utility bills exceeding limits – Section 235
All deductions must be deposited with FBR and monthly statements (in Iris) must be filed.
Sales Tax on Food Delivery Services
Food delivery companies, including apps like Foodpanda, Cheetay, Bykea, and restaurant delivery systems, are taxed differently depending on the province.
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In Sindh, SRB taxes the delivery fee (not the food itself) at 13%
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In Punjab, PRA also taxes delivery services at 16%, even if the food is exempt
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Delivery aggregators are generally liable to register and file monthly returns
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Restaurants offering their own delivery may still be liable for sales tax on services
If the delivery fee is separately mentioned on the invoice, it becomes clearly taxable.
Registration and Compliance Checklist
| Requirement | Applicable To | Filing Frequency |
|---|---|---|
| Income Tax Registration (NTN) | All courier/delivery businesses | One-time |
| Sales Tax Registration (STRN) | All service providers | One-time |
| Income Tax Return | All | Annually |
| Sales Tax Return (Provincial) | Service providers | Monthly |
| Withholding Tax Statements | If registered as agent | Monthly |
| Advance Tax (Section 147) | Companies/AOPs | Quarterly |
Failure to comply may result in:
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Penalties and default surcharge
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Suspension of STRN
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Non-deductibility of expenses
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Legal action by FBR or PRA/SRB
Tax Exemptions and Incentives
Currently, there are no general exemptions for courier and delivery services under provincial sales tax laws. However, exemptions may be available in specific scenarios such as:
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Delivery services for humanitarian or disaster relief under special government notifications
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International freight forwarded under UN or diplomatic missions, if documented
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Tax refunds or input tax adjustments may apply for export-linked courier services
Challenges in Taxation
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Double taxation risk due to overlapping jurisdictions in inter-provincial deliveries
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Cash-heavy operations with poor documentation in small delivery businesses
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Lack of digital invoicing and tracking systems among small operators
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Unregistered freelance riders and delivery agents make tax enforcement difficult
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Complex reverse charge mechanism when receiving foreign logistics services
Recommendations for Compliance
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Register both with FBR and the relevant Provincial Authority (PRA, SRB, etc.)
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Clearly split delivery charges and product price in invoices
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Digitize records of all deliveries and customer payments
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Deduct and deposit withholding taxes as per law
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File monthly sales tax and withholding statements on time
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Appoint a tax advisor or accountant to manage filings and audits
Conclusion
Courier and delivery services in Pakistan are fully taxable under both income and sales tax laws. Provincial sales tax on services is the most significant component, and failure to register or file timely returns may lead to legal complications. As the logistics and delivery sector grows, regulatory authorities are becoming more vigilant in enforcement.
Courier businesses, whether large-scale operators or emerging startups, must prioritize tax compliance, maintain proper documentation, and regularly update their tax status with both FBR and the relevant provincial authorities.
