Is the online sales tax worked out on the full order value, including delivery charges and returned parcels?

The income tax that couriers and payment intermediaries take from online sales is worked out on the gross amount, not on profit. The law adds sales tax into that gross amount. It says nothing specific about delivery charges or about parcels that come back, so those two points are left open by the text.

What does the law say about the amount?

Three provisions describe the base, each in slightly different words.

• Section 6A(2) of the Income Tax Ordinance says the tax “shall be computed by applying the relevant rate of tax to the gross amounts of receipts” for digitally ordered goods or services delivered from within Pakistan through locally operated online platforms.
• Section 153(2A) puts the collection on the payment intermediary (for digital payments) and the courier (for cash on delivery). Each “shall collect tax from the gross amount payable (including sales tax, if any) to the seller”.
• Division IVA of Part I of the First Schedule sets the rates for tax year 2027 as 1% of the “gross amount paid or payable” through digital means or banking channels by a payment intermediary, and 2% of the “gross amount paid or payable” where a courier collects cash on delivery.

On the sales tax side, section 3(3)(c) of the Sales Tax Act makes the payment intermediary or courier liable to collect and pay tax on digitally ordered taxable goods, at the rates in the Eleventh Schedule. Serial number 8 of that Schedule sets the rate at “2% of gross value of supplies”. This page does not work out how that phrase interacts with the Act’s own rules on value of supply.

How does it work in practice?

Your costs do not reduce the base. Stock, packaging, advertising and platform commission are not subtracted. The words used are gross receipts and gross amount payable.

Sales tax is inside the base. If your price to the buyer includes sales tax, section 153(2A) says the income tax is collected on the amount including that sales tax.

The trigger is money moving through a third party. Section 153(2A)(i) applies when a payment intermediary is “processing payment through digital means” for the seller. Section 153(2A)(ii) applies to a courier “collecting cash from a buyer” under cash on delivery terms. The duty follows the cash the courier actually collects or the payment the intermediary actually processes.

Delivery charges. Many sellers add a delivery fee to the order total, and the courier collects the whole amount at the door. The Ordinance does not say whether a delivery fee charged to the buyer is part of the “gross amount payable to the seller”. It does not exclude it and it does not include it by name. That question is not answered by the text held here.

Returned parcels. If a buyer refuses a cash on delivery parcel, the courier collects no cash. Section 153(2A)(ii) is worded around cash collected, so on the text there is no amount from which the courier collects tax for that order. For a card payment that is processed and later refunded to the buyer, the Ordinance does not set out how the tax already collected is reversed or adjusted.

Worked example (illustrative figures)

Bilal sells shoes from his own website in Faisalabad. In September 2026, which falls in tax year 2027, he dispatched 60 orders on cash on delivery.

• 52 orders were delivered and paid. The shoes on those orders were priced at Rs. 190,000 in total, and buyers also paid Rs. 10,400 of delivery charges added to the order total. The courier collected Rs. 200,400.
• 8 parcels, worth Rs. 32,000, were refused and returned. The courier collected nothing on them.

Step 1, returned parcels: no cash collected, so nothing to apply the 2% rate to under section 153(2A)(ii).

Step 2, if the courier applies 2% to all cash collected: Rs. 200,400 x 2% = Rs. 4,008.

Step 3, if the delivery charges were treated as outside the base: Rs. 190,000 x 2% = Rs. 3,800.

Step 4, the difference between the two readings: Rs. 4,008 minus Rs. 3,800 = Rs. 208.

The law does not say which reading is right. The example only shows the size of the gap for this made-up month. The sales tax withheld under serial number 8 of the Eleventh Schedule is a separate amount and is not included here.

What if …?

What if the buyer pays part in advance and part on delivery? Each part passes through a different channel. On the text, the digital part falls under section 153(2A)(i) at 1% and the cash part under section 153(2A)(ii) at 2%.

What if the platform deducts its commission before paying me? Section 153(2A) speaks of the gross amount payable to the seller. The Ordinance does not say whether a platform’s commission is taken out first. The text does not settle this point.

What if my sales are above Rs. 200 million in the year? That changes whether the tax is final or adjustable under section 6A(3). It does not change the amount the tax is worked out on.

Common mistakes

• Working it out on profit. Section 6A(2) uses gross receipts. A month with a loss still has tax deducted on sales.
• Leaving sales tax out of the base. Section 153(2A) expressly includes sales tax, if any.
• Assuming returned parcels are taxed. For cash on delivery, the courier’s duty is tied to cash collected from the buyer.
• Treating a stated position on delivery charges as law. Whatever a courier’s statement shows, the Ordinance itself does not deal with delivery charges by name.

What to check in the official text

Read section 6A(1) and (2) and section 153(2A) of the Income Tax Ordinance as amended to 30 June 2026, then the rates in Division IVA of Part I of the First Schedule. For sales tax, read section 3(3)(c) and serial number 8 of the Eleventh Schedule to the Sales Tax Act, 1990. Any rule, SRO or FBR clarification on delivery charges or refunds is not part of the texts held here.