The Pakistan Tax Bar Association (PTBA) has raised concerns over the Sindh Revenue Board’s (SRB) selective application of its digital payment incentive program for restaurants. The PTBA warned that this could undermine the broader goal of enhancing tax documentation across the province.
According to media reports, in a letter to SRB Chairman Dr. Wasif Ali Memon, the PTBA questioned the rationale behind granting special treatment to 73 restaurants, allowing them to continue charging the full 15% sales tax on card and mobile wallet transactions, despite a reduction to 8% for restaurants accepting digital payments. This creates a discrepancy within the sector, with some restaurants benefiting from preferential treatment while others are left at a competitive disadvantage.
For tax year 2024-25, the SRB increased the general sales tax rate for restaurants from 13% to 15% while introducing a dual-tax-rate system aimed at promoting electronic payments. Under this system, restaurants accepting digital payments are supposed to charge only 8%, while cash payments attract the standard 15% rate.
However, certain POS-integrated restaurants were allowed to continue charging the full 15% even on digital transactions, sparking controversy and accusations of favoritism.
The PTBA has suggested that all restaurants should be required to charge 8% sales tax on transactions made via digital means, and 15% on cash payments. Additionally, the PTBA recommended that no restaurant be allowed to refuse digital payments, to curb potential tax evasion and promote transparency in the sector.
This ongoing issue has raised concerns within the restaurant industry, as businesses fear the imbalance may discourage compliance with the SRB’s digital documentation goals.
