Taxation of Courier and Delivery Services in Pakistan is governed by the Federal Board of Revenue (FBR) and is subject to different taxes depending on the nature of the service provided. In this article, we will discuss in detail the different types of taxes that apply to courier and delivery services in Pakistan.
Sales Tax:
Sales Tax is a tax on the sale, supply, and provision of goods and services. Courier and delivery services in Pakistan are subject to Sales Tax under the Sales Tax Act, 1990. The standard rate of Sales Tax is 17% on the value of the services provided. However, the following services are exempt from Sales Tax:
- Delivery of newspapers and periodicals.
- Delivery of mails by Pakistan Post.
- Delivery of goods and services to embassies and diplomatic missions.
Income Tax:
Income Tax is a tax on the income of individuals, firms, and companies. Courier and delivery services in Pakistan are also subject to Income Tax under the Income Tax Ordinance, 2001. The following are the different types of Income Tax that apply to courier and delivery services:
- Business Income Tax: Courier and delivery services are considered as a business and therefore are subject to Business Income Tax. Business Income Tax is calculated on the net income earned by the business during the tax year. The standard rate of Business Income Tax for companies is 29%, whereas for individuals and partnerships, it varies depending on the income slab.
- Withholding Tax: Withholding Tax is a tax that is deducted at source by the payer and paid to the government. Courier and delivery services are subject to Withholding Tax under the Income Tax Ordinance, 2001. The following are the different types of Withholding Tax that apply to courier and delivery services:
- Withholding Tax on Payments to Non-Resident Persons: If the courier and delivery services are provided by a non-resident person or a foreign company, then the payer is required to deduct Withholding Tax at the rate of 8% of the gross amount paid.
- Withholding Tax on Payments to Resident Persons: If the courier and delivery services are provided by a resident person or a company, then the payer is required to deduct Withholding Tax at the rate of 6% of the gross amount paid.
iii. Advance Tax: Advance Tax is a type of Withholding Tax that is paid in advance by the payer. Courier and delivery services are subject to Advance Tax at the rate of 5% of the gross amount paid.
Provincial Taxes:
Courier and delivery services in Pakistan are also subject to Provincial Taxes. The following are the different types of Provincial Taxes that apply to courier and delivery services:
- Punjab Sales Tax:
If the courier and delivery services are provided within the province of Punjab, then Punjab Sales Tax applies. The standard rate of Punjab Sales Tax is 16% on the value of the services provided.
- Sindh Sales Tax:
If the courier and delivery services are provided within the province of Sindh, then Sindh Sales Tax applies. The standard rate of Sindh Sales Tax is 13% on the value of the services provided.
- Khyber Pakhtunkhwa Sales Tax:
If the courier and delivery services are provided within the province of Khyber Pakhtunkhwa, then Khyber Pakhtunkhwa Sales Tax applies. The standard rate of Khyber Pakhtunkhwa Sales Tax is 15% on the value of the services provided.
- Balochistan Sales Tax:
If the courier and delivery services are provided within the province of Balochistan, then Balochistan Sales Tax applies. The standard rate of Balochistan Sales Tax is 5% on the value of the services provided.
