Punjab increases restaurant sales tax on digital payments to 8% from today

Restaurant customers in Punjab will pay a higher sales tax on digital payments from today (July 1), as the provincial government has increased the rate on payments made through debit cards, credit cards, mobile wallets and QR codes from 5 percent to 8 percent.

The revised tax rate has come into effect under the Punjab Finance Act 2026 and applies to dine in and takeaway transactions paid through eligible digital payment channels.

Under the new tax regime, customers making payments through debit cards, credit cards, mobile wallets and QR codes will now pay an 8 percent sales tax, compared with the previous 5 percent. Meanwhile, payments made through all other methods, including cash, will continue to be subject to a 16 percent sales tax.

The increase forms part of the Punjab government's revenue measures for the new fiscal year. Despite the hike, digitally paid restaurant transactions continue to benefit from a lower sales tax rate than non digital payments, reflecting the government's ongoing effort to encourage documented transactions and the use of formal payment channels.

The previous 5 percent rate had been introduced to promote digital payments and improve documentation of restaurant sales. With the revised rate taking effect today, the tax advantage for customers paying electronically has narrowed, although it remains lower than the rate applicable to cash and other payment methods.