How much income tax is deducted from my online sales paid by cash on delivery or by card?

Two rates apply to online sales in tax year 2027, and which one you pay depends on how the buyer pays. Cash collected at the door by a courier carries 2%. Money that reaches you through a card, bank transfer or other digital channel handled by a payment intermediary carries 1%. The tax is taken before the money reaches you.

What does the law say?

The charge. Section 6A(1) of the Income Tax Ordinance imposes a tax on every person who receives payment for digitally ordered goods or services delivered from within Pakistan using locally operated online platforms, “including online marketplace or websites”. Section 6A(2) says the tax is computed by applying the rate to the gross amounts of receipts. The proviso to section 6A(1) keeps export proceeds that are already subject to withholding under the export provisions of the Ordinance outside this charge.

The rates. Division IVA of Part I of the First Schedule sets the rate for payment through:

How the buyer pays	Who handles the money	Rate for tax year 2027
Digital means or banking channels	Payment intermediary	1% of gross amount paid or payable
Cash on delivery	Courier service	2% of gross amount paid or payable

Who deducts it. Section 153(2A) puts the collection duty on two kinds of businesses, “notwithstanding” the general withholding rule in section 153(1):

• every payment intermediary, when it processes a payment through digital means on behalf of a seller of digitally ordered goods or services through locally operated e-commerce platforms, including websites; and
• every courier business collecting cash from a buyer under cash on delivery terms on behalf of a seller of digitally ordered goods and services through e-commerce platforms, including websites.

Each must collect tax “from the gross amount payable (including sales tax, if any) to the seller” and deposit it to the government treasury. Paragraph (3A) of Division III of Part III of the First Schedule repeats the same two rates, 1% and 2%, for deductions under section 153(2A).

Who counts as an intermediary or courier. Section 153(7) defines a “payment intermediary” as a third party such as a banking company, financial institution, licensed exchange company or payment gateway that routes or settles payments without being the source or recipient of the money. A “courier service” includes logistics services, ride-hailing services, food delivery platforms and e-commerce services that deliver goods and collect cash on the seller’s behalf.

How does it work in practice?

The deduction happens at the point the money passes through a third party. The courier keeps 2% of the cash it collected before it remits the balance to you. The gateway, bank or wallet provider keeps 1% of the card or digital payment before settling it to your account.

“Digital means” is defined in section 2 and is broad: online payment portals, interbank fund transfers, bill payment services, over the counter digital payments, and card payments through point of sale terminals, QR codes, mobile devices, ATMs or kiosks. So a buyer paying by debit card, by QR code or by a bank transfer routed through an intermediary all fall on the 1% side.

Worked example (illustrative figures)

Ayesha runs a clothing store from her own website in Lahore. In August 2026, which falls in tax year 2027, her sales were:

• orders paid by cash on delivery through a courier: Rs. 300,000 collected from buyers;
• orders paid by card through a payment gateway: Rs. 200,000.

Step 1, cash on delivery: Rs. 300,000 x 2% = Rs. 6,000 deducted by the courier.

Step 2, card orders: Rs. 200,000 x 1% = Rs. 2,000 deducted by the gateway.

Step 3, total income tax deducted for the month: Rs. 6,000 + Rs. 2,000 = Rs. 8,000.

Step 4, as a share of her Rs. 500,000 of sales: Rs. 8,000 / Rs. 500,000 = 1.6%.

The figure is on sales, not profit. If her costs were Rs. 400,000, the deduction is still Rs. 8,000. This example covers income tax only. The courier or gateway may also withhold sales tax, which is a separate tax.

What if …?

What if a buyer pays half in advance by bank transfer and half in cash? The law ties each rate to the payment channel, so on the text each part would carry its own rate: 1% on the digital part, 2% on the cash part.

What if I sell services, not goods? Section 6A and section 153(2A) both cover digitally ordered goods and services, so the income tax rates apply to both.

What if the order is from a buyer abroad? The proviso to section 6A(1) keeps export proceeds that are subject to withholding under the export provisions outside section 6A. Export orders are covered on a separate page.

Common mistakes

• Assuming the rate is the same for every order. It depends on the payment channel: 2% for cash on delivery, 1% for digital means.
• Working the tax out on the price before sales tax. Section 153(2A) says the gross amount includes sales tax, if any.
• Reading a 4% cut as the income tax rate. Where a courier also withholds sales tax on goods, the two taxes appear together on the statement. The income tax part is 2%.
• Treating the courier’s delivery fee as tax. The Ordinance sets the tax rate. Charges the courier makes for its own service are a separate matter the Ordinance does not set.

What to check in the official text

Read section 6A(1) and (2) for the charge and section 153(2A) for who collects it. Confirm the rates in Division IVA of Part I and paragraph (3A) of Division III of Part III of the First Schedule, both in the version amended to 30 June 2026. Whether a higher rate applies to a seller who is not on the active taxpayers’ list is not covered on this page. How the tax is treated when you file, final or adjustable, is covered on a separate page.