FBR proposes tax on online academies, e-commerce businesses, and recreational clubs

The Federal Board of Revenue (FBR) has proposed a series of new tax measures in the Finance Bill 2025-26, including taxes on the income of online academies and teachers, as well as e-commerce businesses operating through online marketplaces. 

The bill also introduces income tax on recreational clubs, such as the Islamabad Club, which were previously exempt from taxation.

In a meeting on Wednesday, the Senate Standing Committee on Finance and Revenue, chaired by Senator Saleem Mandviwalla, discussed the new tax provisions. The committee was briefed on tax reductions for salaried individuals under various income slabs. 

According to the FBR, the tax rate for individuals earning between Rs600,000 and Rs1.2 million annually has been reduced from 5% to 2.5%. Those earning Rs1.2 million annually will now pay a tax of Rs12,500, and the surcharge on income exceeding Rs10 million has been reduced from 10% to 9%. The committee recommended exempting individuals earning Rs100,000 per month from taxation.

The FBR also outlined a proposal to tax online academies and teachers who provide digital education services. The new provision, under clause 17C, targets academies earning between Rs20 million and Rs30 million annually. The bill also includes tax obligations for e-commerce businesses operating on online platforms.

Additionally, the committee discussed the proposed tax on recreational clubs, including Islamabad Club, stating that such clubs should pay taxes on income exceeding their expenditures. The Finance Minister clarified that this move aims to broaden the country’s tax net. However, the committee opposed the tax on Islamabad Club’s income and recommended a tax exemption for those with annual incomes under Rs1.2 million. The proposal for taxing small online businesses was also rejected.

The committee further debated the newly introduced tax on goods versus services in e-commerce, suggesting the FBR focus on taxing goods instead. Concerns were also raised about the proposed restrictions on purchases from non-registered suppliers, with members fearing it could stifle competition in the market.

In other discussions, the committee considered the newly introduced mortgage facility, which will provide tax credits for houses up to 2,000 square feet. However, the committee expressed concerns over a clause restricting the purchase of goods to 130% of a person’s wealth from the previous year, recommending an increase to 400%.

The meeting was attended by key officials including Senators Syed Shibli Faraz, Mohsin Aziz, Fesal Vawda, Anusha Rahman, and the Federal Minister for Finance Muhammad Aurangzeb, along with senior officials from the FBR.