What happens if my courier or payment gateway does not deduct the tax?

When a courier or payment gateway pays out a seller’s money without taking the e-commerce tax, the Ordinance does not treat the tax as forgiven. It makes the courier or gateway answer for it, adds a penalty, and leaves the seller exposed to recovery as well.

What does the law say?

The duty to deduct. Section 153(2A) requires two kinds of collector to take tax when an online seller is paid:

• every payment intermediary processing a payment through digital means for a seller of digitally ordered goods or services on locally operated e-commerce platforms (including websites); and
• every courier business collecting cash from a buyer on cash on delivery terms for a seller of digitally ordered goods and services.

Each “shall collect tax from the gross amount payable (including sales tax, if any) to the seller” at the rate in Division IVA of Part I of the First Schedule, and deposit it. For tax year 2027 (1 July 2026 to 30 June 2027) that rate is 1% for payments through digital means or banking channels and 2% for cash on delivery.

Liability of the collector. Section 161(1) says that where a person fails to deduct tax from a payment as required under Division III of Part V of Chapter X (section 153 sits in that Division), or deducts it but fails to pay it to the Commissioner as required, “the person shall be personally liable to pay the amount of tax to the Commissioner”. Section 161(1A) says no recovery can be made without first giving an opportunity of being heard.

The penalty. Entry 12B of the section 182 Table, inserted by the Finance Act, 2025, covers a banking company, payment gateway or courier service provider that fails to deduct tax when paying a seller, or fails to pay the deducted tax as required, for digitally ordered goods or digitally delivered services using an e-commerce platform. The penalty is equal to 100% of the amount of tax involved. The general entry 15 for failure to deduct expressly excludes section 153(2A), so entry 12B is the one that applies here.

Recovery from the seller. Section 162(1) lets the Commissioner “recover the amount not collected or deducted from the person from whom the tax should have been collected or to whom the payment was made”. Section 161(2) separately entitles a collector held liable to recover the tax from the person from whom it should have been deducted.

How does it work in practice?

Three things follow from one missed deduction:

Who	What the Ordinance provides	Section
Courier or gateway	Personally liable for the tax not deducted or not paid over	161(1)
Courier or gateway	Penalty equal to 100% of the tax involved	182, entry 12B
Seller	Tax can be recovered directly from the seller who was paid	162(1)
Seller	Collector held liable may recover the tax from the seller	161(2)

Section 162(2) says that recovering the tax from the seller does not free the collector from other legal action, from default surcharge, or from the disallowance of the related expense.

Where the seller has already paid the tax by the time recovery is taken up, section 161(1B) says no recovery of the tax is made from the collector. The collector is instead liable for default surcharge at twelve per cent per annum from the date it failed to deduct to the date the tax was paid.

For the seller, the missed deduction also matters under section 8. Section 8(1)(e)(ii) discharges the final tax liability only “to the extent that” the tax payable has been deducted at source under Division III of Part V of Chapter X. Receipts on which nothing was deducted are not covered by that discharge.

Worked example (illustrative figures)

Bilal’s courier company in Multan collects Rs. 3,000,000 in cash on delivery for an online seller, Ayesha, during tax year 2027, and remits it all to her without deduction.

1. Tax that should have been deducted: Rs. 3,000,000 x 2% = Rs. 60,000.
2. Courier’s personal liability under section 161(1): Rs. 60,000.
3. Penalty under entry 12B: 100% x Rs. 60,000 = Rs. 60,000.
4. Courier’s total exposure: Rs. 60,000 + Rs. 60,000 = Rs. 120,000.
5. Section 161(2) lets the courier recover the Rs. 60,000 of tax from Ayesha. The Ordinance gives no matching right to pass on the penalty.

Variation. Ayesha pays the Rs. 60,000 herself before recovery is taken up, six months after the courier should have deducted it. Under section 161(1B) no tax is recovered from the courier. Default surcharge instead: Rs. 60,000 x 12% x 6/12 = Rs. 3,600. Section 161(1B) does not say whether the entry 12B penalty still applies in that case.

What if …?

What if the courier deducted the tax but never deposited it? Entry 12B also covers failure to pay the deducted tax as required, and section 161(1)(b) makes the collector personally liable for it. The seller’s evidence that tax was deducted is the collector’s certificate and payment receipt, covered on a separate page.

What if I received the money by bank transfer straight from the buyer? Section 153(2A) places the duty on payment intermediaries and couriers. Whether a particular transfer is a payment processed by a payment intermediary is covered on a separate page.

Common mistakes

• Treating a missed deduction as a saving. Section 162(1) allows recovery from the seller who was paid.
• Assuming the penalty is the general 10% one. Entry 15 excludes section 153(2A). Entry 12B sets 100% of the tax involved.
• Assuming final tax covers undeducted receipts. Section 8(1)(e)(ii) discharges liability only to the extent tax was deducted at source.

What to check in the official text

Read section 153(2A) and the rate in Division IVA of Part I of the First Schedule, then sections 161 and 162. Read entries 12B and 15 of the section 182 Table in the source PDF, because the site text does not reproduce the table. Any Board procedure for the courier’s or gateway’s statements and deposits is not covered on this page.